Traditional and Roth Contribution Limits
Are you wanting to contribute to your retirement accounts? Make sure you know your IRA Contribution Limits. The limits can change year to year or every couple of years so it is vital to make sure you are sure you know what the specific contribution limits are for the particular year you are contributing to.
For instance, in 2012 the maximum you could contribute to all of your traditional or Roth IRA were:
$5,000 or $6,000 if you are 50 or older. One thing to note is that you cannot contribute that maximum if your taxable compensation for the year is smaller than the $5,000 or $6,000. You will only be able to contribute to what your taxable compensation is if smaller than that $5,000 or $6,000.
For 2013 the maximum you can contribute to all of your traditional or Roth IRA are:
$5,500 or $6,500 if you are 50 or older. One thing to note is that you cannot contribute that maximum if your taxable compensation for the year is smaller than the $5,500 or $6,500. You will only be able to contribute to what your taxable compensation is if smaller than that $5,500 or $6,500.
Situations that will affect what you can contribute
The basic contribution numbers are good to be aware of but they are not the say all. You need to know that depending on your specific situation it could change what you can contribute.
For instance, if you are 70 1/2 or older you cannot contribute to your Traditional IRA anymore. Although, you can still contribute to a Roth IRA.
If you file a joint return and only one of you have has taxable compensation, you and your spouse can both make IRA contributions. You must remember though that your combined contributions cannot be more than the taxable compensation that you reported on your return.
Can you contribute if you have a retirement plan at work?
Simply yes. There are still situations that might affect what you can contribute to your Roth IRA or what can be deducted from your traditional IRA contributions. The general rule is that yes you can.
As noted before, your specific situation can change what you can contribute. It is important to talk to your CPA or tax accountant. If you are looking for general contribution info in regards to a self-directed IRA or 401k feel free to contact us.
Author: Nick Barker.