Roth IRA Contribution Limits for 2009 and 2010

by RJ

in Investing

December is a great time to review the Roth IRA contribution limits for the current and upcoming year. Why?

As a member of Gen Y, there are only so many years you will be allowed to contribute to a Roth IRA. Unfortunately, there are income limits which restrict the ability to contribute to an IRA. Phase out limits begin as low as $105,000 for singles and $166,000 if you’re married and filing jointly.

The beginning of your career, while your income is low, is the greatest opportunity for tax savings you might ever have.

A little planning in December while you’re young, can mean thousands of dollars more once you begin withdrawing years down the road.

Below are the Roth IRA Contribution Limits for 2009 and 2010

For 2009

  • Age 49 and below = $5,000
  • Age 50 and above = $6,000

For 2010

  • Age 49 and below = $5,000
  • Age 50 and above = $6,000

What You Should Be Thinking About Today

If you have already maxed out for 2009, (congratulations by the way) start setting aside money in a savings account for 2010. The earlier in the year you make contributions, the more time compound interest works in your favor.

If you haven’t maxed out for 2009, you have until the day you file your taxes to do so. That means, the deadline for contributing for 2009 is April 15, 2010. Your Roth IRA provider should allow you to choose what year you would like to contribute.

Personally, my goal every year is to contribute the maximum I can to a Roth IRA as early in the year as possible. Once I have reached the contribution limit, I immediately start setting aside money for the following years contributions in a savings account.

Understand how Roth IRA contribution limits work and you  can add thousands of dollars to your account. Don’t forego one of the greatest tax saving opportunities of your life.

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{ 1 comment }

BrittNo Gravatar December 2, 2009 at 8:23 pm

Maxing out your annual Roth IRA contributions is always great advice, but doing so early in life is even better advice! If you want to realize the maximum benefits of compound interest, you need plenty of time on your side. And you won’t have that time later in life. It’s best to invest now, rather than regret it later…

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