Roth Vs Traditional IRA Contribution
November 5th, 2006
There are differences between Roth vs Traditional IRA contribution rules. Below is information on Roth vs Traditional IRA contribution rules and tax laws.
Roth vs Traditional IRA Contribution limits
While there are many differences between rules on the Roth IRA and Traditional IRA contributions, the contribution limit is not one of them. The Roth vs Traditional IRA contribution limits are the same as follows. Any taxpayer can contribute to either a Roth IRA, a Traditional IRA or both up to the minimum of:
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$4,000 if age less than 50 or $5,000 if age 50 or older, or
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taxable Compensation for the year
The limit above applies to both traditional and Roth IRA or both. That means if a taxpayer has both a Traditional IRA and a Roth IRA then the total contribution limit for both or all of his or her IRA accounts must comply with the limit above.
Eligibility for Roth vs Traditional IRA contribution
This is one of the key difference between a Roth IRA and a Traditional IRA. While there is not upper income limit on how much you can earn and contribute the a Traditional IRA, there is a strict income limit for a taxpayer to be able to open a Roth IRA or contribute to a Roth IRA. The Roth IRA contribution eligibility limits depend on the taxpayer’s:
- income level
- filing status
- modified adjusted gross income and
- age
Basically the more a taxpayer makes the less he or she can contribute to a Roth IRA whereas he or she can always contribute to a Traditional IRA no matter his or her income. The IRS rules on IRA contributions in 2007, for example, allow only taxpayers who make:
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less than $166,000 if married filing jointly or qualifying widow(er) to contribute to a Roth IRA
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less than $10,000 if married filing separately to contribute to a Roth IRA
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less than $114,000 if filing single or as head of household to contribute to a Roth IRA
Roth IRA vs Traditional IRA contribution age restriction
While to contribute to a Traditional IRA (vs Roth IRA) the taxpayer cannot be older than 70 �, to contribute to a Roth IRA the taxpayer can be any age as long as he or she satisfies the income requirement for Roth IRA contribution.
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