The Cap Salary Filing Joint on a Roth IRA: Roth IRA Maximum Contribution Limits

Jason and Diane have Roth IRA accounts. They file their taxes jointly, so there are some important rules they should be aware of. First, anyone who has an IRA needs to be aware of the contribution limits. For a Roth IRA, the annual contribution limit is $5,000 per year. This means that Jason and Diane can each contribute $5,000 to their individual IRAs. The contribution limits may change each year. This is why it is so important to check annually to determine if the limits have been altered. These contribution limits are strict. You will be penalized if you exceed the limits; however, it is recommended that you do contribute the maximum amount allowed.

Jason and Diane are both 40 years old. Based on their age, they are only allowed to contribute $5,000 annually. If they were over 50, they would be allowed an extra $1,000 per year. This additional amount is a catch-up amount. It is only for individuals over the age of 50.

What's The Cap Salary Filing Joint on a Roth IRA?

This term refers to the amount of income you and your spouse can record before the contribution limits begins to phase out. In 2008, any individual who filed their taxes jointly will begin to have a phase-out when their modified adjusted gross income reached $159,000. In the case of Jason and Diane, the cap salary filing joint on a Roth IRA is important information. In 2008, they made $145,000 for the year. This placed them very close to the limit. If either Jason or Diane received a promotion before the end of the year, they may have exceeded the income limits. If this happened, the amount they will be allowed to contribute to their IRAs would have begun to decrease. The amount of decrease will depend on how much they are over the limit.

Additional income rules state that if you are a widow or widower, there will be an additional $10,000 added to that amount, making the maximum income $169,000. If you are filing single or head of household, the phase-out begins at $101,000 and ended when the income reached $116,000. Since Jason and Diane file joint, they will be working with the $159,000 figure.

IRA contribution limits change each year. In 2009, these figures did change. Currently, if filing joint, the cap salary is $166,000. Jason and Diane did not have any changes in their income, so they still make $145,000 combined. They will not be affected by a phase out. For a qualifying widow, there was again the $10,000 increase. This means that for the year of 2009, the cap salary filing joint on a Roth IRA was between $166,000 and $176,000.

The cap salary filing joint on a Roth IRA will change each year. The changes in the limits reflect cost of living increases and inflation. Jason and Diane must stay aware of these changes. They are still close to the limit, and any salary change may place them above the allowed amount of income. To make sure that they will still be able to contribute to their Roth IRA, they must stay below the allowed amount, currently $166,000 per year. If they lose the right to contribute to their IRA, it could result in large savings losses.

When dealing with a Roth IRA, like Jason and Diane, the amount they are allowed to contribute is based on income. When the allowable amount is exceeded, the amount they are able to contribute will begin to phase-out. Since Jason and Diane file their taxes with the status of married filing joint, they must be aware of these limits. If their income goes above the allowed amount, reaching or exceeding the cap salary filing joint on a Roth IRA, their allowable contributions may actually be reduced to zero!