A:

The 2007 and 2008 income limits for Roth IRA contributions are as follows:

Situations 2007 2008
Individuals who are married and file a joint tax return $166,000 $169,000
Individuals who are married, file a separate tax return and lived with their spouse at any time during the year, AND $10,000 $10,000
Individuals who file as single, head of household or married filing separately and did not live with their spouse at any time during the year $114,000 $116,000

If your income is less than these amounts, you may contribute the full amount of $5,000 ($6,000 if you are at least age 50 by the end of the year for which the contribution is being made).

If your modified adjusted gross income (MAGI) falls within a certain range, you may not be able to contribute up to the full contribution limit. You must use a formula to determine the maximum amount you may contribute to a Roth IRA.

These ranges are as follows:

Situations 2007 2008
Individuals who are married and file a joint tax return $156,000 to $166,000 $159,000 to $169,000
Individuals who are married, file a separate tax return and lived with their spouse at any time during the year, AND 0 to $10,000 0 to $10,000
Individuals who file as single, head of household, or married filing separately and did not live with their spouse at any time during the year $99,000 to $114,000 $101,000 to $116,000

If your income falls within these ranges, you may use IRS publication 590 to assist you with the calculation or consult with your tax professional.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. Can you buy penny stocks in an IRA?

    It is possible to trade penny stocks through an individual retirement accounts, or IRA. However, penny stocks are generally ... Read Full Answer >>
  2. Can I use my IRA to pay for my college loans?

    If you are older than 59.5 and have been contributing to your IRA for more than five years, you may withdraw funds to pay ... Read Full Answer >>
  3. Can my IRA be used for college tuition?

    You can use your IRA to pay for college tuition even before you reach retirement age. In fact, your retirement savings can ... Read Full Answer >>
  4. Why are IRA, Roth IRAs and 401(k) contributions limited?

    Contributions to IRA, Roth IRA, 401(k) and other retirement savings plans are limited by the IRS to prevent the very wealthy ... Read Full Answer >>
  5. How do you calculate penalties on an IRA or Roth IRA early withdrawal?

    With a few exceptions, early withdrawals from traditional or Roth IRAs generally incur a tax penalty equal to 10% of the ... Read Full Answer >>
  6. What are the best ways to use your 401(k) without a penalty?

    The best way to use your 401(k) retirement savings account is to take normal distributions after you reach retirement age. ... Read Full Answer >>
Related Articles
  1. Retirement

    The World's Most Luxurious Retirement Destinations

    If money is no object (or if you would just like to dream), these five spots are the crème de la crème.
  2. Professionals

    Your 401(k): How to Handle Market Volatility

    An in-depth look at how manage to 401(k) assets during times of market volatility.
  3. Professionals

    How to Build a Financial Plan for Gen X, Y Clients

    Retirement is creeping closer for clients in their 30s and 40s. It's a great segment for financial advisors to tap to build long-term client relationships.
  4. Professionals

    Don't Let Your Portfolio Be Trump'd by Illiquidity

    A look at Donald Trump's statement of finances and the biggest lesson every investor can learn.
  5. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  6. Retirement

    Maxing Out Your 401(k) Is Profitable: Here's Why

    It's shocking, but most American workers (73%) have no 401(k) retirement funds. Start saving now to anchor your retirement.
  7. Retirement

    How to Choose the Best Long-Term Care Insurance

    Here's how to find and select a policy that provides the best coverage for you.
  8. Retirement

    How to Choose the Best Medicare Advantage Plan

    Medicare Advantage offers an alternative to Medicare and Medigap. Here’s what you need to know to choose the best plan.
  9. Professionals

    Top Questions to Ask When Choosing a Robo-Advisor

    Think a robo-advisor might be the right choice for you? Be sure to ask these questions first.
  10. Professionals

    Top Retirement Hack? Start with a Lifestyle Change

    Instead of going through the usual retirement planning steps, some people are focusing on fostering a lower cost lifestyle from the start.
RELATED TERMS
  1. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  2. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  3. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  4. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  5. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  6. Medigap

    Also called Medicare Supplement Insurance, Medigap is health ...

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!