How Much Can I Put In My Roth IRA For The Year 2009? Current Contribution Guidelines
How much can I put in my Roth IRA? This is a common question everyone has when they first start this type of investment. Are you saving toward the purchase of your first home or do you wish to help purchase your children or grandchildren’s first homes? Are you actively saving towards retirement? If so, then you could be eligible to contribute to an IRA. This type of account is beneficial to a traditional IRA because the guidelines allow you to withdrawal money tax free before you officially reach retirement age.
While you are free to start withdrawing money once you hit 59. 5 years old, there are some guidelines that make it possible to get some of the money out before then without paying taxes. This is allowed only if you become permanently disabled or want to use the money to purchase your first home. Your children and grandchildren are also eligible to use the money toward their first homes.
While this type of account does make it much easier to access your money before you reach the age of retirement, there are also some restrictions on the amount of money you can put into the account each year. The ultimate amount is determined by how much money you earn in a year and your age. Anyone over 50 years old will be able to contribute more.
There is a cap on income earned, which means you have to earn less than a certain amount in order to qualify as a Roth IRA contributor for the year. In 2009, the cap is $105, 000 for anyone who files as a single taxpayer. For anyone filing jointly or as a married couple, the cap is currently at $166, 000.
If you meet that guideline, then you are eligible to contribute. Yet, the amount you can put in is limited by more guidelines. If you file your taxes as a single and have not yet reached 50 years old, then you are allowed to contribute up to $5, 000 in 2009. Anyone filing single over the age of 50 gets an extra $1, 000 as a catch-up contribution, making it a maximum contribution of $6, 000 for the year.
There is also a rule that states you cannot contribute more than you actually earn, so a single filer who earns less than $5, 000 for the year would only be able to contribute up to the amount of their actual earnings.
The rules are a little different for married couples or those filing jointly. A maximum of $10, 000 combined can be contributed in 2009, unless less than that amount is actually earned.
Note that the catch-up contribution applies to contributors who have officially reached 50 years old, only. It is a way for people getting closer to retirement age to collect some extra money toward retirement. The extra contribution goes on an individual basis, so a married couple can contribute $1, 00 each as long as both people are over the age of 50.
The contribution amounts are limited with a Roth IRA, but for many people having guidelines that allow for early withdrawals is worth the limitations.
