Roth IRA limit calculation

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Detroittl
Posts: 98
Joined: Wed Jun 10, 2015 12:12 am

Roth IRA limit calculation

Post by Detroittl »

Good evening,

How does one calculate the amount they are able to contribute to a Roth IRA? % of AGI?

Thanks In advance.
User avatar
David Jay
Posts: 10520
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Roth IRA limit calculation

Post by David Jay »

One is allowed to contribute a maximum of $6000 per year per person if under age 50. This is subject to limitations:

1. There are maximum income limits (one for single, one for married). If over the limit, one cannot make contributions. This amount changes with inflation, so a quick google for “2019 Roth income limits” should get the limit for last year (contributions for 2019 may be made through April 15).

2. One must have work income (similar, but not exactly the same as “earned income”) that exceeds the amount of contribution. Income from a spouse counts as work income - if one spouse is working and earns more than $12,000 then both Spouses may make the maximum $6000 contribution.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
MotoTrojan
Posts: 11017
Joined: Wed Feb 01, 2017 8:39 pm

Re: Roth IRA limit calculation

Post by MotoTrojan »

David Jay wrote: Tue Mar 17, 2020 8:34 am One is allowed to contribute a maximum of $6000 per year per person if under age 50. This is subject to limitations:

1. There are maximum income limits (one for single, one for married). If over the limit, one cannot make contributions. This amount changes with inflation, so a quick google for “2019 Roth income limits” should get the limit for last year (contributions for 2019 may be made through April 15).
The limit isn’t a hard cutoff but actually a phase-out range where you incrementally reduce your allowable contribution until you hit the upper limit.

Assuming you don’t have pretax IRA assets which can complicate things, you can always backdoor Roth and essentially have no income limit (just need that amount of W2/1099 income to contribute).
User avatar
David Jay
Posts: 10520
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Roth IRA limit calculation

Post by David Jay »

MotoTrojan wrote: Tue Mar 17, 2020 8:40 amThe limit isn’t a hard cutoff but actually a phase-out range where you incrementally reduce your allowable contribution until you hit the upper limit.
Good clarification. I wasn’t trying to be exact - and it showed :(
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
MotoTrojan
Posts: 11017
Joined: Wed Feb 01, 2017 8:39 pm

Re: Roth IRA limit calculation

Post by MotoTrojan »

David Jay wrote: Tue Mar 17, 2020 9:46 am
MotoTrojan wrote: Tue Mar 17, 2020 8:40 amThe limit isn’t a hard cutoff but actually a phase-out range where you incrementally reduce your allowable contribution until you hit the upper limit.
Good clarification. I wasn’t trying to be exact - and it showed :(
No worries, teamwork makes the dream work, especially in these trying times.
Post Reply