How Much Can I Contribute to My IRA?


If you are like most adults preparing for retirement, you have opened an IRA account with the hope of making regular contributions that will grow over the course of time. You may be considering investing in real estate with your self directed IRA. Regardless of the way that you use your IRA, it is essential that you know the federal regulations that are put on these retirement accounts to avoid penalties and maximize your wealth. 

Rules for IRA Account Holders Under 50 Years of Age

Many investors try to make the most of any IRA contributions throughout the year. All qualified income that is earned can be invested at the frequency level that is selected by the account holder. For the year 2011, the maximum annual contribution that you can make to your IRA account is $5000. 

There are some exceptions to this maximum contribution. You can only reach your contribution limit if your Modified Adjusted Gross Income as a single taxpayer with a Roth IRA is $107,000 and not more than $122,000. The salary limit for married filing jointly is $169,000 to $179,000. The strict IRS tax laws set these limits and they must be followed exactly due to the tax deferral benefits of a traditional IRA during tax filings. 

Rules for IRA Account Holders Over 50 Years of Age

Investors that are age 50 or older have the ability to make what are known as catch up contributions to an IRA account. This amount is capped at $1000 and is allowable after the maximum contribution of $5000 is invested. This special legislation was enacted by congress in 2002 to help investors nearing retirement to catch up on losses that may have happened with stocks or earners that could not make maximum contributions before age 50. The catch up limit is adjusted annually with the inflation index.

If you have multiple IRA accounts, the combined contribution limits still remain in effect at $5000 or $6000 respectively per year. This does not mean that multiple accounts can each receive contributions of $5000 or $6000. The totals are set by law and it is up to you to decide how much of the contribution limit will go into each IRA account.

Special Rules for Self-Employed, Unemployed Spouses and Qualified Plans

Every IRA has specific rules that allow contributions or disallow contributions based on certain conditions. If you are married and have a spouse that is unemployed, certain conditions could allow a dual contribution of $5000 or $6000 to an IRA account. Before you begin maxing out your annual contributions, it is helpful to get advice from a CPA or financial manager that specializes in non-traditional IRA contributions.

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