Roth IRA Contribution Rules

Below are the Roth IRA contribution rules.

What are the differences between Roth IRA contribution rules vs traditional IRA contribution rules?

One of the differences between a Roth IRA and a traditional IRA is that you may contribute to a Roth IRA regardless of your age (even after age 70 1/2). Another difference is that you are able to leave amounts in your Roth IRA as long as you live. But, in a Roth IRA, you cannot deduct contributions as you can in a traditional IRA. If you meet the requirements of a Roth IRA, qualified distributions are tax free.

When should I contribute to a Roth IRA?

Generally you can contribute to a Roth IRA if you have taxable compensation and your modified adjusted gross income (AGI) is less than the amount shown for your tax filing status (see table below). Compensation is the same as defined for a traditional IRA.

Below is a table of the Roth IRA contribution limitations based on tax filing status and modified adjusted gross income. The table below is found in the IRS Publication 17 page 125.

If a contribution is made only to a Roth IRA, the maximum contribution limit is the lesser of:

• $4,000 ($5,000 if age 50 or older) or
• your taxable compensation.

There are limits based on your modified adjusted gross income which can reduce your allowable contribution. The table above shows the limitation based on tax filing status and modified AGI.

If you contribute to both Roth IRA and traditional IRAs, your contribution limit for Roth IRAs must be reduced by all your contributions for the year to all IRAs other than Roth IRAs. If you exceed the allowable limit of your contributions to a Roth IRA, you are subject to a 6% excise tax.