What are 2017 Roth IRA Contribution Limits?
As 2016 comes to a close, your first question about the new year is probably, what are 2017 Roth IRA Contribution Limits?
Roth IRAs are a great retirement savings vehicle to grow your nest egg and eventually withdraw income tax-free. Of course, with a Roth IRA your money grows tax-free and you can also withdraw it tax-free in retirement because you don’t get any tax benefit to put money in your Roth IRA. Whereas you traditionally IRA contributions are pre-tax, you Roth IRA contributions are after tax.
Getting to grow your retirement portfolio and having tax-free income in retirement sounds pretty sweet – and it is – but there are some rules that limit how much you can contribute to your Roth IRA each year.
2017 Roth IRA Contribution Limits
Now for the contribution limits. In 2017, individuals can contribute up to $5,500 for people under age 50, or $6,500 for people age 50 and up, to either a traditional IRA or a Roth IRA.
In 2017, individuals under the age of $5,500 can contribute up to $5,500 to a Roth IRA.
And individuals 50 years of age or older can contribute $6,500 to a Roth IRA.
The other thing you should know is that there are income limits for being eligible to contribute to a Roth IRA.
In 2017, income limits for a Roth IRA begin phasing out at $118,000 for singles and $186,000 for couples.
Individuals and couples filing jointly start losing their ability to contribute to a Roth IRA at $118,000 and $186,000, respectively. And the ability to contribute to a Roth IRA disappears altogether once an individual or couple’s income surpasses $133,000 and $196,000, respectively.
If your modified adjusted gross income or is between $118,000 and $133,000 if single, or $186,000 and $196,000, if married, then the amount you can contribute to a Roth IRA in 2017 is reduced. Calculating that reduction requires a little math, so let’s walk through an example.
If you file individually, and you have $125,000 in modified adjusted gross income, then you’ll subtract $118,000 from $125,000, leaving you with $7,000. Then you divide $7,000 by $15,000, giving you a multiplier of 0.47. Multiply your contribution limit ($5,500 if under 50) by that number and subtract the result from the maximum contribution limit. In this case, $5,500 times 0.47 is $2,567, and $5,500 minus $2,567 results in a maximum contribution of $2,933.
