Roth IRA Contribution Limits

As you may already know, Roth IRA is an individual retirement agreement (IRA) established under United States tax laws. The late senator William Roth who represented Delaware, was the chief architect and legislative sponsor of the act that created this IRA type. Ergo, it is named after him. An individual retirement agreement (IRA) is a plan for arrangement of finances after retirement. It offers certain tax advantages for retired senior citizens in the USA. These retirement agreements could be provided for by a person himself or provided by an employer for his employee.

Types of Retirement Plans
There are five types of individual retirement agreements in the USA. They are:

• Roth IRA
• Traditional IRA
• SEP IRA
• Simple IRA
• Self Directed IRA

These IRAs were financial programs that were created so that people will be encouraged to save for post-retirement life. These saving programs were made attractive by making these savings significantly tax free. They are specially designed for working men and women who constitute the middle class.

Wealthy people and trust fund kids are restrained from taking advantage of an IRA by putting income limits on eligibility for the program. The agreement demands that contributions be made through salary and not through other investments! Thus people are prevented from taking an undeserved tax break by Roth IRA contribution limits. These limits change every year according to government policy. Thanks to programs like Roth IRA, middle class working people can have a financially secure life after retirement.

Contribution Limits For 2009
There have been no significant changes in the IRA contribution limits in 2009. Currently the contribution limit is $5,000. However, in case your age is greater than 50 years, the limit is raised for you. That is, your total contribution limit becomes $6,000, that is an additional investment of 1000 bucks is allowed. These limits are applied to Roth IRA as well as other types of IRA.

If you are contributing to both a regular IRA and a Roth IRA, then this contribution limit is combined for both. That is you can invest a maximum of $5,000 or $6,000 in both the IRAs combined.

Roth IRA was designed with very meticulous planning. For the financial year 2009-10, married couples who are jointly contributing have a limit of $5,000 again. If any of them is more than 50 years of age, the 2009 Roth IRA contribution limits say that you can invest as much as $6,000 together. All these limits are applicable if their combined income or MAGI(modified adjusted gross income) is below $166,000.

If the couple's MAGI falls in the range between $166,000 and $176,000, they can contribute an amount lesser than $5,000. If the income exceeds $176,000, you cannot contribute to Roth IRA as you are earning well enough already. In this case you cannot invest in Roth IRA as you cannot be given any tax relief.