How much can you Contribute to an Ira in 2011

Your IRA is an important tool that you have in the quest to save for retirement. It is a savings vehicle that allows you to not only save money for your retirement, but also save some money in the form of reducing your taxable income. However, there are limits to how much you can save in a given year, so what are the limits for 2011?

Assuming your are contributing to a Roth IRA, the maximum contributions for a married couple filing jointly in 2011 is 6,000 dollars if you are over 50 while it is 5,000 dollars if you are under the age of 50. This is according to YourRothIRA. However, it should be noted that there are several exceptions to this rule. Any person making more than 179,000 dollars a year is not eligible to contribute to an IRA and other restrictions apply as well depending on how you file.

What if you are filing as a single person? The limit under this filing scenario is still 6,000 dollars for anyone over 50 and 5,000 dollars for anyone under 50. However, the income limit drops from 179,000 dollars to 122,000 dollars. Anyone making between 107,000 and 122,000 dollars will see their contribution limit phased out. This is explained at YourRothIRA.

What if you are contributing to a Traditional IRA? A person who is contributing to a Traditional IRA will not have any income restrictions when contributing to the IRA. The difference between the two is that a Traditional IRA sets limits at the amount of money that may be eligible for deductions from your taxes, but no limit on the amount of the contribution. Keep in mind that the amount of money you are allowed to contribute is still the same as a Roth IRA.

If you want to use a Roth IRA, but don’t qualify under the IRS guidelines, you can simply convert your Traditional IRA into a Roth IRA. There is no limit to how much money you make if you are converting a Traditional IRA into a Roth IRA. If you are more comfortable with a Roth IRA, you should fund a traditional and then convert it to a Roth if you can’t qualify to simple open a Roth IRA.

When it comes to how much you can contribute to an IRA, it depends on a lot of factors. The type of IRA you have, the amount of money you make and whether you care about when the taxes are taken out of that income. The general rule is 5,000 dollars for someone under 50 and 6,000 dollars for someone over 50, but always consult an attorney or tax expert for explanation on your unique tax situation.