What Is The Maximum IRA Contribution?

There are several IRA with corresponding maximum IRA contribution limits.

For traditional IRA the maximum IRA contribution is marked at $5,000 with catch-up contributions pegged at $6,000. These maximum IRA contributions are determined by your adjusted gross income. However if you are earning only $3,000 for a particular year then your maximum allowable contribution is set at $3,000 and not the maximum IRA contribution of $5,000.

Your traditional IRA contributions are subject to the income phased out rule; these contributions are tax-deductible but the deductions are to be phased-out once you've reached a fixed level of your adjusted gross income or income less standard adjustments to the income like tax penalties on early withdrawals, moving expenses, alimony and contribution to an individual retirement plan.

If you are an active participant in an individual retirement plan, phased-out tax deductions will start at a lower income level.

The current maximum IRA contribution for Roth IRA is pegged at $5,000 for those ages 49 and below and $5,000 for those ages 50 and above. An individual's maximum contribution is determined by his Modified Adjusted Gross Income or MAGI.

If your MAGI is below a fixed level you can qualify for a maximum allowable ROTH IRA contribution, If your MAGI has reached the fixed level, your ROTH IRA contribution is subject to reduction or phasing out.

If you are single and your MAGI is pegged at a range at $95,000 or below, you can avail of a maximum IRA contribution of $4,000. And if your MAGI are at the range of $99,000-$114,000 you are eligible for a partial or phased-out contribution.

If you are married and have filed jointly and your MAGI falls at a range of $156,000 or below, then you are allowed to contribute to the maximum amount. Partial or phased-out contribution is for those couple or joint filers whose MAGI have reached a range of $156,000-$166,000.

For Simple IRA contributions in the mode of salary deferral they can go up to 100% of the employee's compensation. But must not exceed at $10,000 for 2006, $10,500 for 2007, catch up contributions for plan investors over the age of 50 is pegged at $12,000 for 2006 and $13,000 for 2007.

Maximum allowable Education IRA contributions are pegged at $2,000 annually. If you are a single-filer and your Modified Adjusted Gross Income or MAGI is below $95,000 or your spouse are joint filers and has MAGI at a range of $190,000-$220,000 you can contribute up to the maximum amount of $2,000.

The Government set 401k contribution limit are pegged at $15,500 for those under 50. And $20,500 with catch-up contribution limits for those over 50. For the employer-set 401k contribution limits, the employer will determine the maximum IRA contributions which must not exceed the Government limit.

For maximum IRA contributions on Simplified Employees Pension or SEP IRA, the contributions are pegged at 25% of income or $44,000 for 2006 or whichever is lower; these contribution limits are indexed for inflation. The SEP contributions may be made up the plan until employer's return is due for the year.

For self-employed individuals, the limits for SEP-IRA contributions are marked at 18.6% of net profit. The maximum IRA contributions for SEP IRA on those classified as self-employed are computed from net profit adjusted for the deduction of self-employment tax.

Ira Contribution