Who can contribute and how much? Any individual who has earned income may contribute to a Roth IRA. (There are income thresholds, which may reduce the amount you can contribute.) And, there is no 70½ age limit on making contributions. Here are a few details about annual contributions.
Individuals may contribute up to $4,000 in 2005 ($5,000 in 2008), if their modified adjusted gross income (MAGI) is less than $95,000. If the individual’s MAGI is between $95,000 and $110,000, they may contribute a reduced amount adjusted for their income.
Married couples filing jointly may contribute up to $8,000 in 2005 ($10,000 in 2008), if their MAGI is less than $150,000. Contributions for joint filers are reduced for MAGI's between $150,000 and $160,000.
Any individual who is 50 years of age or older by the end of the current year, will be able to make an additional catch-up contribution of $500 per year. In 2006, the additional catch-up amount will increase to $1,000.
Roth IRA contributions may not be made by individuals with MAGI of more than $110,000 or couples with MAGI of more than $160,000.
Individuals earning no more than $50,000, who contribute to an IRA, will receive a non-refundable tax credit. This tax credit is a percentage of your qualified retirement savings contribution not exceeding $2,000 (only available for taxable years 2002 through 2006).
