How to Calculate Your Reduced Roth IRA Contribution Limit

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).

5 responses to How to Calculate Your Reduced Roth IRA Contribution Limit

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

  2. 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. 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”.

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