1. What is Roth IRA Contribution Limit?

The Roth IRA contribution limit is the maximum amount you can contribute to a Roth IRA in a given year. These limits are set by the IRS and may be reduced or eliminated based on your Modified Adjusted Gross Income (MAGI) and tax filing status.

2. How Does the Calculator Work?

The calculator uses IRS rules for Roth IRA contribution limits:

Calculation Method: The calculator determines your maximum allowed contribution by applying the appropriate phase-out reduction based on your MAGI relative to the limits for your filing status.

3. Importance of Contribution Limits

Details: Contributing more than allowed can result in IRS penalties. Understanding your contribution limit helps with retirement planning and avoiding excess contribution taxes (6% excise tax).

4. Using the Calculator

Tips: Enter your anticipated Modified Adjusted Gross Income (MAGI), select your tax filing status, and enter your age. The calculator will show your maximum allowed Roth IRA contribution for the year.

5. Frequently Asked Questions (FAQ)

Q1: What counts as MAGI for Roth IRA purposes?
A: MAGI includes wages, dividends, capital gains, business income, and other income minus certain deductions like student loan interest.

Q2: Can I contribute to both Roth and Traditional IRA?
A: Yes, but the combined contribution cannot exceed $7,000 ($8,000 if 50+) across all IRAs.

Q3: What if I accidentally over-contribute?
A: You must withdraw excess contributions by your tax filing deadline to avoid 6% penalty tax.

Q4: Do contribution limits change annually?
A: Yes, limits are adjusted for inflation. This calculator uses 2024 limits.

Q5: Are there exceptions to the income limits?
A: The "backdoor Roth IRA" strategy allows high earners to contribute via non-deductible Traditional IRA contributions followed by conversion.