Skip to Content
Investing Specialists

The Ins and Outs of IRAs: Income and Contribution Limits

Check your eligibility and see how much you can contribute to an account.

For a vehicle that was set up to be a simple way for Americans to save for retirement, the IRA sure has a lot of complex nooks and crannies. First, there are three key types--traditional deductible IRA, traditional nondeductible IRA, and Roth IRA. There's also the fact that you can manipulate your IRA in various ways, rolling over, converting, and recharacterizing IRA assets. Finally, there are rules governing when and how you can withdraw your assets.

But the first thing you need to know about IRAs is whether--and how much--you can contribute to one. The rules regarding eligibility and contribution amounts don't change a lot from year to year, but they change enough that you have to keep an eye on them. Here's what you need to know. (Morningstar's IRA Calculator also gives you a quick view of your eligibility.)

Roth IRA
Tax Treatment

  • Contributions are taxed; qualified withdrawals tax-free; no required minimum distributions.

Contribution Limit

  • Under age 50: $5,000
  • Over age 50: $6,000 (the limits are the same for both 2010 and 2011)

Contribution Deadline

  • April 18, 2011, for 2010 contributions
  • April 17, 2012, for 2011 contributions

Income Limits for 2010
Single filers can make a full Roth IRA contribution if their modified adjusted gross income is less than $105,000. They cannot make a Roth contribution at all if their modified adjusted gross income is more than $120,000. (Contributions are phased out at modified adjusted gross incomes between $105,000 and $120,000. Such individuals might also consider opening a traditional nondeductible IRA and converting to a Roth.)

Married couples filing jointly can make a full Roth IRA contribution if their modified adjusted gross income is less than $167,000. They cannot make a Roth IRA contribution at all if their modified adjusted gross income is more than $177,000. (Roth IRA contributions are phased out at modified adjusted gross incomes between $167,000 and $177,000. Such individuals might also consider opening a traditional nondeductible IRA and converting to a Roth.)

Income Limits for 2011
Single filers can make a full Roth IRA contribution if their modified adjusted gross income is less than $107,000. They cannot make a Roth contribution at all if their modified adjusted gross income is more than $122,000. (The deductibility of contributions is phased out at modified adjusted gross incomes between $107,000 and $122,000. Such individuals might also consider opening a traditional nondeductible IRA and converting to a Roth.)

Married couples filing jointly can make a full Roth IRA contribution if their modified adjusted gross income is less than $169,000. They cannot make a Roth IRA contribution if their modified adjusted gross income is more than $179,000. (Roth IRA contributions are phased out at modified adjusted gross incomes between $169,000 and $179,000. Such individuals might also consider opening a traditional nondeductible IRA and converting to a Roth.)

Traditional Deductible IRA
Tax Treatment

  • Contributions are tax-deductible; assets compound tax-deferred; ordinary income tax on withdrawals.

Contribution Limit

  • Under age 50: $5,000
  • Over age 50: $6,000 (the limits are the same for both 2010 and 2011)

Contribution Deadline

  • April 18, 2011, for 2010 contributions
  • April 17, 2012, for 2011 contributions

 

Income Limits for 2010
Single filers who are covered by a retirement plan at work can fully deduct their contribution if their modified adjusted gross income is less than $56,000. They cannot deduct their contributions at all if their modified adjusted gross income is more than $66,000. (The deductibility of contributions is phased out at modified adjusted gross incomes between $56,000 and $66,000.)

Married couples filing jointly who are covered by a retirement plan at work can fully deduct their contributions if their modified adjusted gross income is less than $89,000. They cannot deduct their contributions if their modified adjusted gross income is more than $109,000. (The deductibility of contributions is phased out at modified adjusted gross incomes between $89,000 and $109,000.)

Single filers who are not covered by a retirement plan at work can fully deduct their contributions at any income level.

Married couples filing jointly, but neither of whom is covered by a retirement plan at work, can fully deduct their contributions at any income level.

Married couples filing jointly with one spouse who is covered by a retirement plan at work can fully deduct their contributions if their modified adjusted gross income is less than $167,000. They cannot deduct their contributions if their modified adjusted gross income is more than $177,000.

Income Limits for 2011
Single filers who are covered by a retirement plan at work can fully deduct their contribution if their modified adjusted gross income is less than $56,000. They cannot deduct their contributions at all if their modified adjusted gross income is more than $66,000. (The deductibility of contributions is phased out at modified adjusted gross incomes between $56,000 and $66,000.)

Married couples filing jointly who are covered by a retirement plan at work can fully deduct their contributions if their modified adjusted gross income is less than $90,000. They cannot deduct their contributions if their modified adjusted gross income is more than $110,000. (The deductibility of contributions is phased out at modified adjusted gross incomes between $90,000 and $110,000.)

Single filers who are not covered by a retirement plan at work can fully deduct their contributions at any income level.

Married couples filing jointly, but neither of whom is covered by a retirement plan at work, can fully deduct their contributions at any income level.

Married couples filing jointly with one spouse who is covered by a retirement plan at work can fully deduct their contributions if their modified adjusted gross income is less than $169,000. They cannot deduct their contributions if their modified adjusted gross income is more than $179,000.

Traditional Nondeductible IRA
Tax Treatment

  • Contributions are not tax-deductible; assets compound tax-deferred; ordinary income tax on withdrawals.

Contribution Limit

  • Under age 50: $5,000
  • Over age 50: $6,000 (the limits are the same for both 2010 and 2011)

Contribution Deadline

  • April 18, 2011, for 2010 contributions
  • April 17, 2012, for 2011 contributions

Income Limits for 2010
There are no income limits for nondeductible IRA contributions. Nor are there income limits on IRA conversions, so it's possible to open a traditional IRA, then convert it to a Roth.

See More Articles by Christine Benz

New! 30-Minute Money Solutions
Need help picking up the pieces in this turbulent market? 30-Minute Money Solutions by Morningstar director of personal finance Christine Benz simplifies the daunting task of getting your financial house in order. Written for novice and experienced investors alike, this book offers manageable, step-by-step solutions for tackling money challenges and building a comprehensive financial plan in simple 30-minute increments. Learn more.
Order Your Copy Today--$16.95

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.