Roth IRA Limits for 2010
- To contribute to a Roth in 2010, you have to earn what the IRS considers "compensation," such as wages, bonuses, commissions, fees, tips or self-employment income. Pensions, Social Security, dividends and interest do not count. Spousal contributions are an exception. If your spouse earns compensation and you do not, she can contribute to both a Roth IRA for you and for her, provided you're filing a joint return.
- If you were younger than 50 years old at the end of 2010, you could contribute a maximum $5,000 to your Roth IRA. You could contribute $6,000 if you were 50 or older. If you have a Roth and a traditional IRA, those limits apply to the total deposited in both accounts. If you contribute to both your spouse's Roth and your own, you would have the option to deposit the maximum in both accounts. For example, if you're 45, you could put $5,000 in your account and $5,000 in your spouse's.
- Your adjusted gross income (AGI) -- which you calculate on the first page of your 1040 -- could place added limits on your Roth contributions. If you're filing a joint return, the limit is lowered if your joint 2010 income reaches $167,000. If it's $177,000 or more, you can't contribute at all. If you're married, filing separately, you can only contribute if you make less than $10,000, and you cannot contribute the full $5,000. For singles, heads of households and couples who file separately and don't live together, the cutoff is $105,000 for reduced contributions, $120,000 for no contributions.
- If you contributed more than the legal limit in 2010, the IRS will charge a 6 percent tax on the extra deposits. The IRS gives you two alternatives for avoiding the tax, however. You can withdraw the money before your tax return for 2010 is due -- including any extensions -- along with any interest the contributions earned. Alternatively, you can carry over the contribution to 2011 and reduce the amount you contribute in that year.