Comments on: Traditional and Roth IRA Contribution Limits

By: Amanda Flowers

Amanda Flowers — Tue, 28 Feb 2012 02:29:12 +0000

My father is 70 years old. He has been retired for 2 years and has most of his money in traditional IRA’s. I am trying to start up a business in which my father wants to help me with, however he is worried sick that he we be taxed upto 30% if he takes out $100,000. Is there any way around avoidiing the extra taxes and sending him into a higher tax bracket? All the money will be going towards a business investment.

By: tom foster

tom foster — Mon, 27 Feb 2012 13:33:13 +0000

my company had a retirement for the employees in witch they froze, when i became 75 i retired and am getting $70.00 a month from jp morgan. I would like to go back and work for this co. an i am not getting enough income to live on. can this be done.

By: Angelica

Angelica — Tue, 14 Feb 2012 00:12:20 +0000

Question, I am 45 years old and I am going to take out my IRA Distribution
I believe the total as of now is $24,000, what is the penalty ? and do I have to report
on my taxes for next year ? do I pay more tax again or just the penalty ?

By: Jim

Jim — Mon, 06 Feb 2012 22:42:57 +0000

Kate,

Tha IRS realizes that the complexity of the tax code will sometimes cause things like this to happen. Contact one or both of the institutions where the IRAs are held and tell them that you need to remove excess contributions. I’m sure they will be able to help you. However, I would do this before the tax deadline to avoid possible IRS penalties.

By: Sharon Hansen

Sharon Hansen — Mon, 06 Feb 2012 22:13:15 +0000

That is not a stupid question Steve. I have long wondered that myself. I don’t know the answer and if you have since found out, please post.

By: Kate

Kate — Sun, 29 Jan 2012 06:22:50 +0000

I think I made a mistake to the 2011 contribution. I put $5k into a tranditional IRA, and another $5k into a roth IRA. what will happen? any advice may help. Thanks

By: Jim

Jim — Sat, 28 Jan 2012 21:28:31 +0000

Can a sole proprietor contribute 100% of profits (and the only earned income for that year) from consulting done during the 2011 tax year to an individual 401(k) and also contribute to a Roth or Traditional IRA where the combination of the contributions to the IRA and 401(k) exceed the person’s total earned income for the tax year?

By: Loretta

Loretta — Wed, 21 Sep 2011 15:57:57 +0000

I put the full amount of my inherited IRA into AAPL stock ($27k). I was going to sell the stock and take the profit made this year as a distribution ($18k). Will it not be taxed as long term capital gains? I read that in a Traditional IRA the withdrawal is taxed as ordinary income (see below). It this true for inherited IRA also?
”  There’s a trade-off for the benefits of a traditional IRA. When you withdraw money from your account, you have to pay tax on that money. Even worse, you have to treat those withdrawals as ordinary income, even if some of the profits actually came in capital gains or dividends — items that would typically qualify for a lower tax rate outside a retirement account.
Because of that drawback, it’s important to put the right stocks inside a traditional IRA. Apple (AAPL), for instance, has been a great growth stock that has turned many investors into millionaires over the years. But in an IRA, what would have been capital gains taxed at 15% will turn into ordinary income that will carry taxes of as much as 35%.”

By: hedi

hedi — Fri, 16 Sep 2011 23:01:59 +0000

I wonder if you might be able to answer a quick tax question? Being a
novice investor in the US, I overcontributed to a traditional IRA – I
already had $5k of Roth and didn’t know that there was a combined
limit of $5k for both types of fund. My understanding is that I can
request a disbursement now without penalty since I haven’t filed taxes
for 2011 yet (so long as I request the disbursement as due to an
over-contribution). Does this sound about right to you? I certainly
haven’t made any money on the contribution so far this year…

Thanks,

By: gregg

gregg — Sat, 03 Sep 2011 01:02:00 +0000

As the owner of a holding company, the holding company pays my SEP contribution every year. The holding company owns a leasing business with 3 employees. If I continue to receive SEP contribution from the holding company is there an requirement that the employees also get a SEP contribution from either the holding company or lease company? These employees have each been employed with the leasing company for over 5 years.

By: Steve

Steve — Thu, 25 Aug 2011 05:29:36 +0000

I’m not too smart on this stuff but I’ll ask anyway. I am 55. Can I put $10,000 into my traditional IRA per year and only take the $6K deduction?

Thanks, hope thats not a stupid question!

Steve

By: Chris

Chris — Thu, 30 Jun 2011 01:23:47 +0000

@jg, if you’re over 70 1/2 you can’t contribute to an IRA. not sure why you would want to take a distribution and then contribute it again unless you’re forced to…. thus the 70 1/2 rule.

By: jg

jg — Wed, 29 Jun 2011 15:03:54 +0000

my only income this year is from traditional IRA distribution, which i understand is taxable income. i now have some unexpected cash (flow) but no income, can i contribute to my ira and have that deduction (in effect to offset the distribution which is taxable income)?

thank you.

By: Patrick

Patrick — Mon, 27 Jun 2011 07:51:05 +0000

So do i need to do anything with next years tax filings in regards to my ROTH IRA?

By: Tom Dziubek

Tom Dziubek — Sat, 25 Jun 2011 02:21:13 +0000

Likewise, whereas the tax break from a conventional IRA would the ability to deduct your contribution from that year’s income on your income taxes, the tax break from a ROTH is that the money would be able to be withdrawn tax-free once it qualifies.

By: the cyclist

the cyclist — Sat, 25 Jun 2011 01:10:37 +0000

Since it is a Roth IRA, you are presumably paying after-tax dollars into it. So, you’ve already paid the tax. Any future growth/earnings are not taxed.

By: Patrick

Patrick — Fri, 24 Jun 2011 07:50:01 +0000

Hi. i recently started a ROTH IRA through Share Builder. I am new to the who IRA stuff. when exactly will i pay tax? any help would be greatly appreciated.

By: Chris

Chris — Sun, 29 May 2011 18:23:04 +0000

Jerri, His eligibility would be determined by how much income you report as a couple and whether or not your husband is an “active” participant in a plan, which it sounds like he is. Would suggest reading the IRS publication to isolate your specific circumstances.

By: Jerri

Jerri — Wed, 04 May 2011 22:14:56 +0000

I have a quick question. My husband and I are both retired. He receives gifted money from his father twice a year. He would like to deposit this into his traditional IRA, but we’re not sure if he is eligible. He also receives stock options payments for the business he used to own. We are both 60 years old. Any info would be greatly appreciated. Thanks.

By: Jim G

Jim G — Sat, 16 Apr 2011 14:43:01 +0000

for 2010 i contributed 6000 to my roth ira and 2000 to a traditional ira. I just found out I can’t do this?
does anyone know my options. I already filed my 2010 tax return

By: Brian

Brian — Fri, 15 Apr 2011 18:39:51 +0000

Michael… same situation! Did you ever find an answer? I want to contribute the 401(k) funds to an existing (or new, if necessary) IRA so I can deduct it from my massive tax owed. Please let me know!!

Thanks,
-Brian

By: Michael

Michael — Wed, 23 Mar 2011 19:01:48 +0000

What is your email address? I would love to send you a quick question about TIRA decutions. Thanks! speedy0307 AT gmail.com

By: Michael

Michael — Wed, 23 Mar 2011 18:49:03 +0000

My wife and I both contributed to employer sponsored 401Ks for the first four months of 2010. We both then swithched jobs and have not contributed to 401Ks since. Our joint incomes are pretty high. If we file sepearately (my income is about 30% higher than my wife), can we get any kind of partial deduction for contributing to a traditional IRA?

By: Kim

Kim — Thu, 17 Mar 2011 16:43:40 +0000

I have question. My co-worker is a know it all, and she said something that didn’t quite fit with me. We work in a VERY small office and are not eligible for the Employer Sponsored plan just yet. Because of this, we both have ROTH IRA’s. If we don’t have an ERP and we’re not eligible for one, are our ROTH contributions deductible, or a portion of them? I have always been under the impression that no contribution to a ROTH is ever deductible whether you have an ERP or not. Can someone help? Before I go saying “I told you so”, I’d like this backed up. I have researched it, and so far I’m still right. Just making sure though. Thanks.

By: Dave Paschall

Dave Paschall — Thu, 10 Mar 2011 01:16:35 +0000

Adjusted gross income is $103,000, married filing jointly. Want to know if we can contribute to a Roth IRA and deduct it on our 2010 taxes? What is the percent we can deduct from our income if we contribute $6000?

By: Joanne

Joanne — Mon, 07 Mar 2011 17:03:44 +0000

I am 68 and was unemployed in 2010. I am collecting social security and two pensions. I don’t call myself retired because I am looking for a part-time job. Can I still contribute to my Roth, Traditional IRA, and 401(k) for 2010?

Joanne

By: Flexo

Flexo — Wed, 16 Feb 2011 18:36:52 +0000

Contributing to a Roth 401(k) doesn’t preclude you from contributing to a Roth IRA, so as long as you’re within the income limitation and you haven’t contributed to a Traditional IRA, you can contribute to a Roth IRA up to the max.

By: the cyclist

the cyclist — Wed, 16 Feb 2011 18:29:09 +0000

I have a Roth 401(k) at work, to which I have contributed the maximum ($16,500). Can I still contribute to a Roth IRA, assuming I am not over the modified AGI limit?

By: Bob Palone

Bob Palone — Wed, 16 Feb 2011 16:01:12 +0000

Hello;
I rolled over my 401K from my previous employer to an IRA. Can I still make the $6K max contribuition to this IRA this year 2010 or does rolling over the 401K max that option out for 2010?

Thanks

Bob…

By: Flexo

Flexo — Wed, 16 Feb 2011 05:21:07 +0000

You can contribute to a Roth IRA up until the tax filing deadline (for example, April 2011 for 2010′s Roth IRA).

By: Parag Shah

Parag Shah — Wed, 16 Feb 2011 05:13:11 +0000

One very nice aspect of traditional IRA’s is that you can contribute for the previous tax year up until the tax filing deadline of the present year (i.e. you can contribute and get a tax deduction for 2009 up until the April, 2010 tax deadline for 2009′s taxes). You cannot do this with a Roth IRA.

By: Flexo

Flexo — Wed, 02 Feb 2011 14:55:54 +0000

Thanks, RC, I’ll correct the article.

By: RC

RC — Wed, 02 Feb 2011 13:51:33 +0000

Flexo-

I think you have a typo/error in the 1st paragraph when you say ” If you file for an extension, your IRA deadline will be extended as well.” I believe per IRS pub 590, it needs to be contributed by the due date of the return not including the extension, which is April 18th this year as you mention.

By: Angie

Angie — Tue, 25 Jan 2011 01:41:53 +0000

I don’t have a 401k plan through my current employer. In 2010, I contributed $5,000 to a Roth IRA and $6,000 to a previous 401K that is now a rollover. I am 32 years old, and in doing my taxes, I just realized that this may be a problem. Do I have a course of action, or do I face some type of penalty?

By: David Raskin

David Raskin — Mon, 27 Dec 2010 21:34:12 +0000

My wife wants to convert her IRA of $2000 in 2011 to a ROTH. Will this effect her limit on what she can contribute to her ROTH in 2011 assuming she qualifies for the maximum contribution amount?

By: eric

eric — Mon, 20 Dec 2010 21:08:59 +0000

Holy moly…..it took me awhile to realize this post was updated from last year. I was starting to wonder where all of these comments came from…..

By: eric

eric — Mon, 20 Dec 2010 20:57:46 +0000

P.S. Sorry I didn’t see Jeff’s comment below. Yes, make sure your AGI actually qualifies you. If it does, then the maximum annual limit is $5,000. :)

By: eric

eric — Mon, 20 Dec 2010 20:56:28 +0000

$5,000 if you’re less than 50 years old.

By: Jenna

Jenna — Mon, 20 Dec 2010 20:11:05 +0000

I definitely need to add a little bit more to my Roth IRA. Thanks for the reminder.

By: SteveDH

SteveDH — Mon, 20 Dec 2010 17:20:04 +0000

You need to call your planner back!! If you rollover a Traditional IRA to a Roth IRA this year you can spread the taxes bill between 2011 and 2012. You do NOT have to pay ANY additional on this year’s return. You could, if disciplined, save up for the necessary tax bills in 2011 and 2012. (tax form 8606)

By: Tom Dziubek

Tom Dziubek — Wed, 17 Nov 2010 13:15:13 +0000

You are correct. You can make contributions up until the due date of your return.

By: Money Reasons

Money Reasons — Wed, 17 Nov 2010 11:50:30 +0000

Say, don’t we have into next year to contribute to our 2010 roth iras? I believe it’s April 15, 2011 is the last day to contribute for a 2010 roth ira.

I’ve been holding off, but I like to get it done in December, even though we have a bit of a window still for the Roth.

Too bad they didn’t continue to up the Roth IRA limit (as you can tell I’m a Roth fan) :)

By: Flexo

Flexo — Wed, 17 Nov 2010 04:39:15 +0000

The IRS knows because brokerages (should) submit a tax form (5498) to the IRS outlining your contributions for the year. It might take them a while for them to figure it out… but I wouldn’t chance it. It’s not difficult for the IRS to match your 1040 with the 5498 submitted by your IRA issuer.

By: Tom Dziubek

Tom Dziubek — Wed, 17 Nov 2010 04:30:41 +0000

Darwin, you kind find out more about via the IRS’ Pub 590. http://www.irs.gov/publications/p590/ch01.html#en_US_publink1000230422

By: Darwin's Money

Darwin's Money — Wed, 17 Nov 2010 04:07:34 +0000

I was curious reading this article. What happens if hypothetically, one contributes to a Roth IRA during the year, then their income breaches the limit by year’s end? Does the IRS really know? Do they cross check this? Wondering what would happen if said taxpayer either wanted to self-correct somehow or just ignore altogether and wing it with the IRS. I don’t make that kind of money so I don’t have that problem LOL. But curious for future reference.

By: Flexo

Flexo — Wed, 17 Nov 2010 01:56:20 +0000

No worries! I’ll put together an article on 401(k) rules for 2011 shortly.

By: Greg

Greg — Wed, 17 Nov 2010 01:46:19 +0000

You can delete/ignore my comment. I was confusing it with 401k limits, which is what I was interested in… Sorry for my snarkiness. I read and enjoy your blog all the time!

By: Flexo

Flexo — Tue, 16 Nov 2010 23:39:57 +0000

The contribution limits for Traditional and Roth IRAs are in the first paragraph in the article. ($5,000 combined if under 50 years old, $6,000 combined for everyone else.)

By: Greg

Greg — Tue, 16 Nov 2010 23:20:04 +0000

The article is titled “Traditional and Roth IRA Contribution Limits for 2011″, yet mentions nothing about Traditional IRA contribution limits…I just noticed that there is a link to myfederaltax.com, but that’s not really sufficient to warrant mention in the title of the article…

By: Ryan

Ryan — Thu, 11 Nov 2010 02:40:28 +0000

I have already contributed $10,000 to my roth this year. I would like to convert my Trad. Ira to my roth. Do I have to wait until 2011?