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Roth IRA Limits

What are the Roth IRA limits imposed by the IRS?

Do you have to meet an age requirement before contributing? And what about income or contribution limits?

Before you make a Roth IRA contribution, you need to know the restrictions for the current tax year.

As a general rule, the following factors limit your ability to open a Roth IRA and/or limit the amount of your contribution...

  • Your type of income
  • Your age
  • Your amount of income

All three of these factors influence your maximum contribution limit, so it's important to understand the rules applicable to each.

Roth IRA Income Restrictions

Your type of income significantly impacts your eligibility to contribute to your Roth IRA.


Because the IRS does NOT treat all income equally. Certain types of income don't qualify.

In fact, only taxable compensation qualifies for Roth IRA contributions.

So what's taxable compensation?

According to IRS Publication 590, taxable compensation includes...

"Wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. It also includes commissions, self-employment income, nontaxable combat pay, and taxable alimony and separate maintenance payments."

But taxable compensation does NOT include...

  • Earnings and profits from property
  • Interest and dividend income
  • Pension or annuity income
  • Deferred compensation
  • Income from certain partnerships
  • Any amounts you exclude from income

In short, if you don't have taxable compensation, you don't have the type of income necessary for making a Roth IRA contribution.

Roth IRA Age Limits

Does the IRS impose an age limit on who can or can't open and fund a Roth IRA?

The answer is no.

Regardless of age, as long as you have taxable compensation, you can make a Roth IRA contribution (assuming you meet the Roth IRA income limit rules).

As long as you earn taxable compensation during the course of the tax year in which you wish to make a Roth IRA contribution, it doesn't matter if you're 5 years old or 95 years old...

Roth IRA limits do NOT exist in respect to age and ability to contribute.

Even when it comes to required minimum distributions, you don't have to worry about a Roth IRA age limit.

For instance, a Traditional IRA requires you to take annual distributions after you reach age 70 ½.

But your Roth IRA?

You aren't limited by such an arbitrary age limit. In fact, as long as you have taxable compensation, you can contribute to your Roth IRA every year of your life and never withdraw a penny.

The only time you need to take age into account is age 59 ½.


Because that's the age you can withdraw your Roth IRA investment gains tax-free and penalty-free, assuming you've already met the 5 year rule.

Roth IRA AGI Limits

So what are the Roth IRA limits when it comes to the amount of income you earn?

You already know what type of income you need, but how much can you earn and still qualify to make a Roth IRA contribution?

That's a great question.

Just remember the following three points, and you'll be fine...

  • You can't contribute more than you earn
  • You can't contribute more than IRS Limits
  • Your contributions phase out at a certain point

So what do these three points mean?

Well, obviously you can NOT contribute more than you earn. After all, Roth IRA contributions must come from taxable compensation. So if you contribute more than you earn, it stands to reason that you're contributing non-taxable compensation. And that's not legal under IRS rules!

In addition, you can't contribute more than the IRS limits. Each year, the IRS publishes income limits based on your tax filing status. If you exceed the Roth IRA limit, you can NOT make a single penny in Roth IRA contributions.


The Roth IRA limits on your income phase out.

What does that mean?

It means that as you approach the maximum income limit for making a Roth IRA contribution, your maximum contribution limit gradually phases out.

Roth IRA Contribution Limits

So what are the Roth IRA limits when it comes to contributions?

That's a good question.

Generally speaking, your maximum annual Roth IRA contribution is...

  • $5,500 if you're under the age of 50
  • $6,500 if you're 50 years old or older

Your maximum annual contribution is $5,500 if you're under the age of 50, but it's $6,500 if you?re over the age of 50.


Because the IRS allows a $1,000 Roth IRA catch up contribution for people over the age of 50. The idea is that if those nearing retirement age put a few extra dollars toward their retirement nest egg, they'll have a better chance of ending up with a well-funded retirement.

Also remember...

When it comes to contributions, the Roth IRA limits of $5,500 and $6,500 phase out according to the amount of income you earn during the course of the tax year.

Read Roth IRA Phase Out for a detailed break down of the numbers.


The IRS places Roth IRA limits on...

  • The type of income you can contribute
  • The amount of income you can earn
  • The size of your annual contribution

However, you don't have to worry about any Roth IRA limits regarding your age and ability to contribute.

This means you can open and fund a Roth IRA regardless of your age, as long as you generate taxable compensation for the tax year.

Of course, you can't contribute more to your Roth IRA than you earn, and Roth IRA limits on the amount of income you can earn and still contribute effectively places an income cap on Roth IRA contributions.

As you approach those income limits, your maximum Roth IRA contribution limit gradually phases out to zero.

So it's important to know what the Roth IRA limits are and how they effect your ability to contribute.

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