Roth IRA Income Limits
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.
What Type of Income Affect Roth IRA Eligibility?
The only income that counts toward the IRS' Roth IRA income limits is compensation income.
Compensation income is income you were given for work you performed. This income includes wages, salaries, tips, bonuses, commissions, and self-employment income. Other income that counts include taxable alimony and military differential pay.
Income that does not impact your eligibility to invest in a Roth IRA is income that, generally, was not paid to you for doing work. This includes interest and dividends from investments, income from rental property, and pension payments.
Income Limits and Tax Filing Status
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 2011 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 $107,000 to contribute up to the limit.
If your income falls between $107,000 and $122,000 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 $122,000 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 $169,000 to contribute up to the limit.
If your income falls between $169,000 and $179,000 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 $179,000 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. The following shows the income limit for full contributions for single and married filing joint filers.
