Roth IRA Limits
Note: The article below refers to the 2012 tax year. Assuming your IRA was opened by Dec. 31, 2012, you have until the tax filing deadline–April 15, 2013–to make a 2012 contribution. The income/contribution limits have increased for the 2013 tax year. Click here for the details.
The Internal Revenue Service has a set of rules that individuals must meet to be qualified to invest in a Roth IRA. One set of rules pertains to income limits. If your income exceeds a certain amount you will not be allowed to contribute to a Roth IRA.
You must have "earned income"
To qualify for a Roth, you must have "earned income" in the year you want to make a contribution.
Earned income is money paid for work you performed (or in the case of a small business, profit distributions from the business). This income includes wages, salaries, tips, bonuses, commissions, and self-employment income. Other income that counts include taxable alimony and military differential pay. Earned income does not include things like interest and dividends from investments, income from rental property, and pension payments.
If your earned income for the year is less than the contribution limit (in 2013, $5,500 for those under 50), you can only contribute up to your earned income. In other words, if your earned income is $3,000, you can only contribute up to $3,000.
Income Limits and Tax Filing Status
|2012 Roth IRA Income and Contribution Limits|
|Filing Status||Income Limit1||Contribution Limit|
|Married filing jointly||$173,000 or less||$5,0002|
|$173,001 to $183,000||Begin to phase out|
|Greater than $183,000||Ineligible for a Roth IRA|
|Married filing separately||$0||$5,0002|
|$1 to $9,999||Begin to phase out|
|Greater than $10,000||Ineligible for a Roth IRA|
|Single||$110,000 or less||$5,0002|
|$110,001 to $125,000||Begin to phase out|
|Greater than $125,000||Ineligible for a Roth IRA|
1Modified Adjust Gross Income (MAGI) per IRS.
2Individuals age 50 and over can contribute up to $1,000 extra per year to "catch up" for a total of $6,000.
The IRS uses different rules for income limits based on your tax filing status for that year.
There are three category the IRS uses:
- Married filing jointly or qualified widow(er)
- Married filing separately
- Single or head of household
The following is a summary of the current Roth IRA Income Limits.
Roth IRA Modified Adjusted Gross Income (AGI)
When the IRS speaks to various income levels they are speaking to modified adjusted gross income. To figure your modified adjusted gross income you will need your adjusted gross income from your tax return. You can use Worksheet 2-1 from IRS Publication 590 to modify your AGI for Roth IRA purposes.
Roth IRA Income Limits for Single Filers
If you file as single, head of household, or married filing separately (if you did not live with your spouse at any time during the year) your income must be less than $110,000 to contribute up to the limit.
If your income falls between $110,000 and $125,000 you cannot contribute up to the limit. Your contribution is reduced. Use the IRS worksheet to calculate your new reduced Roth IRA contribution limit.
If your income exceeds $125,000 you cannot contribute to a Roth IRA.
Roth IRA Income Limits for Married Filers (Joint)
If you file as married filing joint or as a qualifying widow(er) your income must be less than $173,000 to contribute up to the limit.
If your income falls between $173,000 and $183,000 you cannot contribute up to the limit. Your contribution is reduced. Use the IRS worksheet to calculate your new reduced Roth IRA contribution limit.
If your income exceeds $183,000 you cannot contribute to a Roth IRA.
Roth IRA Income Limits for Married Filers (Separate)
The IRS severely limits the ability to contribute to a Roth IRA for individuals that are married but file separately. If you do not have income you will not be allowed to contribute to a Roth IRA.
If your income is less than $10,000 you cannot contribute up to the limit. Your contribution is reduced. Use the IRS worksheet to calculate your new reduced Roth IRA contribution limit.
History of Roth IRA Income Limits
The Internal Revenue Service gradually increases the income limit to account for inflation. For more details, see 2011 Roth IRA income limits.