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Roth IRA Rules

2014 Roth IRA Rules - Eligibility, Income, Contribution Limits, and More

Note: The article below refers to the 2014 tax year. Assuming your IRA was opened by Dec. 31, 2014, you have until the tax filing deadline–April 15, 2015–to make a 2014 contribution. The income/contribution limits may increase for the 2015 tax year. Click here for current contribution limits.

When it comes to a Roth IRA, “rules” is a subjective term. But whether you’re looking for Roth eligibility criteria or what you can and cannot do with an account once you have one, you’ve come to the right place.

First, we’ll tackle the rules for Roth IRA eligibility. See below for additional rules regarding eligibility and rules for investors who already have Roth IRAs.

Are You Eligible?

Two things determine whether you can open a new Roth IRA or continuing to invest in an existing account:

  1. Your current-year income
  2. Your tax filing status.

First, you have to have “earned” income; that’s income you make from working, typically in the form of salary, hourly wages, or profits from a small business.

If you have earned income, you then need to make sure you aren’t going to make more than the federal government allows for Roth IRA account holders. The amounts differ depending on your tax status.

What is My MAGI?

The earning limits are also on based something called your modified adjusted gross income (MAGI). MAGI is calculated by taking the adjusted gross income from you tax forms and adding back deductions for things like student loan interest and higher education expenses. A full explanation of MAGI is available here.

Contribution Limits

Here’s a chart that details the income limits, by tax filing status. It also indicates how much you can contribute each year if you are under those limits.

2014 Roth IRA Income and Contribution Limits
Filing Status Income Limit* Contibution Limit
Married filing jointly $181,000 or less $5,500**
$181,001 to $191,000 Begin to phase out
Greater than $191,000 Ineligible for a Roth IRA
Married filing separately*** $0 $5,500**
$1 to $9,999 Begin to phase out
Greater than $10,000Ineligible for a Roth IRA
Single $114,000 or less $5,500**
$114,001 to $129,000 Begin to phase out
Greater than $120,000 Ineligible for a Roth IRA

*Modified Adjust Gross Income per IRS.

**Individuals age 50 and over can contribute up to $1,000 extra per year to "catch up" for a total of $6,500.

***Married (filing separately) can use the limits for single people if they have not lived with their spouse in the past year.

15 Months to Contribute

One quirk in the IRA laws is that you have 15 months to make a contribution for the current tax year. In 2014, for instance, you can make a contribution any time from January 1, 2014 to April 15, 2015 (the tax filing deadline).

More on Earned Income

And one other thing to keep in mind. If your earned income is less than your eligible contribution amount, your maximum contribution amount equals your income. In other words, if you have $3,000 in earned income, the most you can contribute to the Roth is $3,000 (instead of $5,500).

More Rules That Make Roth's Special

Here are a few other eligibility-related features of a Roth IRA:

  • You can make contributions at any age.
  • You are not required to take a “mandatory distribution” from a Roth (traditional IRA account holders must start withdrawing money at 70 ½).
  • A non-working spouse can open a Roth IRA based on the working-spouse’s earnings (and the couple’s tax filing status).
  • You can still make your annual contribution if you also convert money from a tax-deductible account (like a traditional IRA) to a Roth in the same year.
  • You can contribute to a Roth even if you participate in a retirement plan through your employer.

Rules for Existing Roth Accounts

Now that you know that you’re eligible, here’s are links to some of the most common rules—and frequently asked questions--to consider when managing your account.

Thinking About Opening an IRA?

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Comments (10)
my wife currently has earned income as a secretary...i am receiving retirement from a teachers retirement group but occassionally work...can we contribute to the roth ira program? my wife also receives an income from a state retirement program but has since gone back to work full-time.
Sure. If you are "Married, Filing Jointly", you can contribute fully to a Roth IRA so long as your total income is less than $173,000.
So if you make less than $110k and you contribute 23K max to an employer 401k you can still add 6k in a Roth, but not if you make over 110k?? How fair is that?
Indeed. Go figure. Congress and the IRS work in mysterious ways!
Not only that, for married filing joint, why isn't the income limit double what the amount is for single (or married filing separate)? So, shouldn't it be $220,000 for MFJ. So weird these folks are that work in Congress.
The way I see it is that a married couple only has one house payment to make (or condo/apartment/ect). Because of that, they have less yearly expenses than two individuals living seperately. I suppose what they don't consider is the additional expense of kids, which is probably much more than a house payment!
You are only allowed to contribute 15% of your income to your retirement plans. $110k of income caps your retirement contributions to $16.5k total between your Roth IRA and your 401k.
I'm a independent contractor who Is in a 28% tax bracket. what would be the tax I pay on a Roth ira as I am investing money I have already payed 28% tax on and is in my savings?
Money going into your Roth IRA gets taxed at a similar rate to the rest of your income, but it may end up pushing you into a different tax bracker. You would be best off checking with a financial planner or accountant.
Money invested in a Roth IRA is after tax money. You have already paid the income tax on the money. There is no additional tax on the investment. Also, when you take your distributions in the future, they are free from federal taxes. Both the capital investment and the earnings are tax free.
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Important Roth Information

Each year, the IRS updates the rules for Roth IRA. Here are all the details for 2013 & 2014: