Tax Tip: Roth IRA Contribution Rules

Confused about whether you can contribute to a Roth IRA? Check these simple rules:

Income:
To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than:

  • $160,000 — Married Filing Jointly
  • $10,000 — Married Filing Separately (and you lived with your spouse at any time during the year)
  • $110,000 — Single, Head of Household, or Married Filing Separately (and you did not live with your spouse during the year).

Age:
There is no age limitation for Roth IRA contributions. Unlike traditional IRAs, you can be any age and still qualify to contribute to a Roth IRA.

Contribution Limits:
In general, if your only IRA is a Roth IRA, the maximum 2003 contribution limit is the lesser of your taxable compensation or $3,000 ($3,500 for those age 50 or over). The maximum contribution limit phases out if your modified adjusted gross income is within these limits:

  • $150,000-$160,000 — Married Filing Jointly
  • $0-$10,000 — Married Filing Separately (and you lived with your spouse at any time during the year)
  • $95,000-$110,000 — Single, Head of Household, or Married Filing Separately (and you did not live with your spouse)

Contributions to Spousal Roth IRA:
You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.

When to Make Contributions?
Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).

For complete information and definitions of terms, get IRS Publication 590, "Individual Retirement Arrangements." Download the publication from their Web site or call toll free 1-800-TAX-FORM (1-800-829-3676) to request a free copy of the publication.

You may like these other stories...

Starting in January 2015, the IRS will limit the number of refunds that are electronically deposited into a single financial account or pre-paid debit card to three, as part of the agency’s effort to crack down on...
House proposes $10.5B, eight-month highway billThe House Ways and Means Committee proposed a transportation funding bill on Tuesday that calls for a temporary extension of current transportation funding levels until May 31,...
Swiss banks threaten freeze on US accounts over tax evasionJames Shotter of the Financial Times reported on Monday that several Swiss banks have threatened to freeze American clients’ accounts unless they prove they...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.