2014 Roth IRA Contribution Rules & 2013 Income Limits


What’s new with Roth IRA contribution limits in 2014? Be sure to bookmark this page for reference of all the rules. First, let’s recap the Roth IRA maximum contribution limits. These maximums vary depending on your age, and the 2013 IRS regulations haven’t changed significantly.

Basically, if you are under fifty in 2014, the most the IRS allows you to contribute to your Roth IRA is five thousand five hundred dollars. If you are over fifty, they are a bit more generous and allow you to contribute up to six thousand five hundred dollars. This is known as the catch-up provision and applies to most, but not all, types of retirement accounts.

Keep in mind that these max contribution limits apply to the combined contribution to both your Roth and traditional IRA, if you have both types of accounts. So your combined contribution to both of these funds cannot exceed these limits based on your age.

The tricky part is the income limits. Unlike traditional IRA limits, which restrict the amount of your contribution from your taxable income, the Roth IRA rules work in reverse. This means that your income determines how much you can contribute to your Roth. These income limits are based on your modified Adjusted Gross Income (AGI) and  your tax filing status. The higher your AGI, the less you can contribute.

Roth IRA Income Limits for 2014

If you file your taxes as a single filer, head of household or married filing separately (where you and your spouse did not live together), then you can make a full contribution to your Roth IRA with an income of up to one hundred and fourteen thousand dollars. Up to this amount you face no restrictions, but once your income increases above this point, the IRS begins to “phase out” the amount you can contribute. Finally, once your income reaches above one hundred and twenty-nine thousand dollars, no contribution is allowed. These 2014 limits are up from 2013.

If your tax status is married filing jointly, your contribution limits begins to phase out at one hundred and eighty-one thousand dollars and no contributions are allowed above and income limit of one hundred and ninety-one thousand dollars. This 2014 rule represents an increase of three thousand dollars over 2013.

Finally, if your tax status if married filing separately (you lived together at least part of the year) you can only make the maximum Roth contribution if your modified AGI was zero! The phase out income range goes up to ten thousand dollars, at which point no contributions are allowed.

Check out the IRA Contribution Cheat Sheet for more, or the graph below should help.

Your Tax Filing Status Is And Your Income (Modified AGI)

Roth Rules

Single, head of household, or married filing separately and you and your partner did not live together.

Less than $114,000

Contribute up to the maximum.

From $114,000 to less than $129,000

Phased out contributions

$129,000 or more

Ineligible for Roth IRA Contributions

Married filing jointly

Less than $181,000

Contribute up to the maximum.

From $181,000 to less than $191,000

Your contribution starts to phase out.

$191,000 or more

Ineligible for Roth IRA contributions.

Married filing separately and you lived with your partner at least some of the year

$0

Contribute up to the maximum.

Between $0 and $10,000

Phased out contributions.

Above $10,000

Nope!

2013 Roth IRA Income Limits

Say goodbye to 2013! The upper limit for Roth contributions was several thousand dollars lower in ’13. For folks filing single or married filing separately, your income could reach up to $112,000 before starting to be phased out before reaching the upper limit of $127,000. Married couples filing jointly can earn significantly more – up to $178,000 before phasing out completely at $188,000. And if you’re married filing separately, you can see from the chart below that it’s just not worth it.

Your Tax Filing Status Is And Your Income (Modified AGI)

Roth Rules

Single, head of household, or married filing separately and you and your partner did not live together.

Less than $112,000

Contribute up to the maximum.

From $112,000 to less than  $127,000

Phased out contributions

$127,000 or more

Ineligible for Roth IRA Contributions

Married filing jointly

Less than $178,000

Contribute up to the maximum.

From $178,000 to less than $188,000

Your contribution starts to phase out.

$188,000 or more

Ineligible for Roth IRA contributions.

Married filing separately and you lived with your partner at least some of the year

$0

Contribute up to the maximum.

Between $0 and $10,000

Phased out contributions.

Above $10,000

Nope!

 

How to Calculate Phased Out Limits

If the amount you can contribute must be phased-out, you can figure your reduced contribution limit as follows.

  1. Start with your modified AGI.
  2. Subtract the following from the amount in step 1:
    1. $181,000 (2014) if filing a joint return or qualifying widow(er),
    2. $0 if married filing a separate return, and you lived with your spouse at any time during the year, or
    3. $114,000 (2014) for all other individuals.
  3. Divide the result in step by $15,000 (or $10,000 if filing a joint return, qualifying widow(er), or married filing a separate return and you lived with your spouse at any time during the year).
  4. Multiply the maximum contribution limit (before reduction by this adjustment and before reduction for any contributions to traditional IRAs) by the result in step 3.
  5. Finally, subtract the result in step 4 from the maximum contribution limit before this reduction. The result is your phased out contribution limit.
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