Roth IRA Limits Based on Salary

by W D Adkins

A Roth IRA is a very popular way to save and invest for retirement, and no wonder. You do not get a tax deduction for making contributions to a Roth. But if you follow the rules, every penny you take out after you retire is completely exempt from income taxes. The Internal Revenue Service (IRS) does set limits on contributions to a Roth IRA based on salary.


Anyone who makes a salary or other earned income can normally open and contribute to a Roth IRA. Your can contribute up to $5,000 per year. That amount goes up to $6,000 when you reach age 50. Your earned income must be at least as much as the amount you contribute. You can be any age and you don’t have to stop making contributions when you reach age 70 1/2, as is the case with traditional IRAs.


The IRS sets upper income limits for contributing to IRAs. When your adjusted gross income, including your salary, exceeds these limits, the amount you can contribute is gradually reduced until it is phased out entirely. This is different than phase-out rules for traditional IRAs. With a traditional IRA, the amount you can contribute remains the same, but your tax deduction is phased out.

Income Limits

If you file as a single person, the amount of money you can contribute to a Roth IRA is reduced starting when your adjusted gross income (AGI) reaches $107,000 and falls to zero when your AGI is $122,000. For a person who is married and filing a joint return, the limits are $169,000 to $179,000. When you are married and file a separate return the phase-out limits are $0 to $10,000. Phase-out limits are adjusted periodically. You can get current information on the IRS website.

Partial Phase-Out

To figure out the reduction in your allowed contribution when your salary falls between the lower and upper phase-out limits that apply to you, subtract the lower limit from your AGI and divide the result by the difference between the lower and upper limit. For example, if you are single and your AGI is $113,000, you would subtract $107,000 from $113,000, leaving $6,000. Divide by $15,000 to get 0.4. Multiply the regular contribution limit ($5,000 or $6,000) by the result to find the reduction in your allowed contribution. In this example, if your regular contribution limit is $5,000, you multiply by 0.4 for a reduction of $2,000. That leaves an allowed contribution of $3,000. Adjust the calculated amount by rounding up to the nearest $10. Finally, if your calculated remaining contribution is greater than zero but less than $200, you can contribute $200.

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