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How to Calculate Your Reduced Roth IRA Contribution Limit

By JLP | September 26, 2006

For 2006, the contribution phaseout for Roth IRA Contributions using the following Modified Adjusted Gross Income (MAGI) ranges are:

For those filing Married Filing Jointly:

MAGI of $150,000 to $160,000 (for 2007 this range is expected to be $156,000 to $166,000)

For most Single Filers:

MAGI of $95,000 to $110,000 (for 2007 this range is expected to be $99,000 to $114,000)

What this means is that if you are married filing jointly and your MAGI is LESS THAN $150,000, you can contribute the maximum to a Roth IRA ($4,000 or $5,000 if you are over 50 years old). If your MAGI is over $150,000 but less than $160,000, your contribution will be phased out. If your MAGI is over $160,000, you CANNOT contribute to a Roth IRA (but you can still contribute to a non-deductible traditional IRA).

Topics: IRAs, Roth IRA, Taxes | 5 Comments »


5 Responses to “How to Calculate Your Reduced Roth IRA Contribution Limit”

  1. Spender Says:
    September 26th, 2006 at 2:00 pm

    Are Roth IRA contributions tax deductible? I didn’t think they were, though I wouldn’t mind being wrong. :)

  2. JLP Says:
    September 26th, 2006 at 2:22 pm

    Spender,

    Roth IRA contributions ARE taxed. However, as long as the contributions are invested for at last least 5 years and you are over 59 1/2 (with certain exceptions), withdrawals are tax free.

  3. Foobarista Says:
    September 27th, 2006 at 1:57 pm

    We’ve run up against the MAGI limit the last two years. We got under it by using my wife’s self-employed 401K and funding it to the max.

    Getting under the MAGI for funding Roths is a good reason to up the 401K contribution if you’re “on the bubble”.

  4. Free Money Finance Says:
    September 29th, 2006 at 5:21 am

    Star Money Articles for the Week of Sept. 25

    Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond: MightyBargainHunter admits he was wrong. Five Cent Nickel asks whether we should focus on big or small items when saving money. Blueprint for Financial Prosperi…

  5. Mighty Bargain Hunter » Roundup for week of 25 September 2006 Says:
    October 1st, 2006 at 1:09 am

    […] All Financial Matters plots out how to calculate your reduced Roth IRA contribution limit. […]

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