Roth IRA Contribution Limits
As mentioned earlier, Roth individual retirement account (IRA) annual contribution limits mirror those for traditional IRAs. So, the maximum annual amount that can be contributed to a Roth IRA in 2013 and 2014 is $5,500, with an additional $1,000 contribution allowed for those age 50 and above in the year of contribution. Like nondeductible contributions to a traditional IRA, contributions to a Roth IRA are made on an after-tax basis.
Figuring the contribution reduction. If your adjusted gross income (AGI) is above a certain amount, your maximum contribution limit for the year is gradually reduced. If your AGI is above the limits listed above, you cannot contribute to a Roth IRA. However, you can still make nondeductible contributions to a traditional IRA if you want to. (The income limits for Roth IRA contributions are indexed for inflation and rounded to the nearest multiple of $1,000.)
For 2013, Roth IRA contributions are limited under the following circumstances:
| Roth IRA Contribution Phaseout |
| Filing status |
Modified AGI |
| |
Phaseout begins |
No deduction |
| Married filing jointly |
$178,000 |
$188,000 |
| Married filing separately |
$0 |
$10,000 |
| Single or Head of household |
$112,000 |
$127,000 |
For 2014, the income limitations are as follows:
| 2012 Roth IRA Contribution Phaseout |
| Filing status |
Modified AGI |
| |
Phaseout begins |
No deduction |
| Married filing jointly |
$181,000 |
$191,000 |
| Married filing separately |
$0 |
$10,000 |
| Single or Head of household |
$114,000 |
$129,000 |
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Did You Know?
Under the Heroes Earned Retirement Opportunities (HERO) Act, enacted May 29, 2006, members of the armed forces serving in Iraq, Afghanistan and other combat-designated localities can count their tax-free combat pay as earned income for determining the contribution amount for traditional and Roth IRAs. Prior to this change, a military member whose earnings consisted only of tax-free combat pay was barred from contributing to either IRA.
Under the HERO Act, an eligible taxpayer may make an additional contribution to his or her retirement savings plan that is attributable to the combat zone compensation within three years of enactment. A taxpayer may file an amended return within one year of making such additional contribution to claim a credit or refund resulting form the additional deduction.
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Excess contributions. A 6 percent excise tax applies to excess contributions made to a Roth IRA. However, any contribution withdrawn on or before the due date for filing your tax return (generally April 15) is treated as an amount that is not contributed. So, you can simply avoid the excise tax by withdrawing the excess contribution in time.
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