How Much Money Can Go Into a Roth IRA Per Year?

by Ciaran John, studioD

Roth Individual Retirement Arrangements, also called Roth Individual Retirement Accounts, provide you with tax benefits that you do not get when you invest in other retirement accounts. Your contributions to a Roth IRA grow tax-deferred and in many instances you pay no tax when you make withdrawals. However, to limit your tax free gains, the Internal Revenue Service places annual contribution limits on Roth accounts.


You cannot invest in a Roth IRA unless you have taxable compensation for the current tax year. As of 2011, your annual contribution cannot exceed the higher of your taxable income or $5,000. People age 50 or older can make "catch up" contributions in addition to the basic annual Roth IRA deposit. As of 2011, you can make a catch-up contribution of $1,000, as long as your total contribution does not exceed your taxable income. However, aside from capping contributions, the IRS also prevents high earners from investing in Roth IRAs so you can only contribute if you income stays below certain limits.


As of 2011, married people filing their taxes jointly and people filing as qualifying widowers can only make the maximum Roth contribution if their modified adjusted gross income does not exceed $168,999. To calculate your modified AGI you add back some tax-deductible expenses such as traditional IRA contributions to your taxable earnings. If you file as a single taxpayer, or you have lived apart from your spouse and file as married filing separately, you can make the full contribution if your modified AGI falls below $107,000. You cannot make a full contribution if you lived with your spouse during the tax year and have a tax status of married filing separately.

Partial Contributions

As of 2011, you can make a reduced contribution to a Roth if you are married and file jointly, or you file as a qualifying widower, if your modified AGI falls between $169,000 and $178,999. Single tax filers and married people who live and file separately can make partial contributions if their modified AGI falls between $107,000 and $121,999. If you have lived with your spouse within the last year but file your taxes separately, you can make a partial contribution if your modified AGI does not exceed $9,999. A number of factors affect your partial contribution so you should consult a tax professional to determine your contribution amount. If your modified AGI exceeds these levels then you cannot contribute.


In addition to making annual contributions to a Roth IRA, you can also bolster your Roth with funds from your traditional IRA through a Roth conversion. Unlike a Roth, a traditional IRA contains pre-tax money. During the conversion process, you have to pay income tax on the money that you intend to transfer to the Roth. No income restrictions or contribution limits apply to conversions and the money grows tax-deferred inside your Roth. If you leave your money in your traditional IRA, you end up paying taxes on your earnings when you make withdrawals so Roth IRAs can reduce your taxes in the long run.


When you withdraw from a Roth, you pay no income tax if you have owned the Roth for five years or more and if you wait to make withdrawals until you reach the age of 59 1/2. Other withdrawals incur a 10 percent tax penalty and you also have to pay income tax although the penalty and taxes apply only to your earnings and not the principal. You can avoid the penalty if you use the money to cover certain expenses such as tuition fees.

About the Author

Ciaran John began writing in 1994 with contributions to "The Hourly Press" and "The Sawbridgeworth Observer," and has since written for many online and print publications. He has 12 years experience working for financial services companies as a business banker, lender and investment representative and spent four years working in human resources.