2010 IRA Contribution and Deduction Limits

The IRS recently released the 2010 IRA contribution and deduction limits. IRAs (Independent Retirement Accounts) are a great way to save for retirement, even if you already have a 401k at work.  Figuring out how much you can contribute and whether your contributions are deductible can be a bit daunting at times. In fact, to figure out these limits, we need to look at several factors:

  • Whether you are contributing to a traditional IRA, Roth IRA, or both
  • Whether you will be 50 years of age or older before 2011
  • Your modified adjusted gross income (MAGI)
  • Your taxable compensation
  • Whether you or your spouse are covered by a retirement plan at work

And to add to the confusion, many do not realize that anybody can contribute to a traditional IRA regardless of income or retirement plans at work. But it may not be deductible!

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So to help wade through these factors, we’ve put together some handy charts below to help you out.  Let’s start with the maximum contribution limits for traditional and Roth IRAs.

Tax YearRegular Contribution LimitCatch-up Contribution Limit for those 50 & older
2015$5,500$1,000
2014$5,500$1,000
2013$5,500$1,000
2012$5,000$1,000
2011$5,000$1,000
2010$5,000$1,000
2009$5,000$1,000
2008$5,000$1,000
2007$4,000$1,000
2006$4,000$1,000

There are several things to keep in mind with these limits.

  1. The contribution limits are combined, meaning you must add together any traditional and Roth IRA contributions, even if they are spread across multiple IRA accounts.
  2. If your taxable compensation in 2010 falls below these contribution limits, it becomes your contribution limit. In other words, you can’t contribute to an IRA more than you make.
  3. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (modified AGI).

And that brings us to the next set of tables. How much of a traditional IRA contribution is deductible depends on several factors: (1) your tax filing status, (2) whether you or your spouse are covered by a retirement plan at work, (3) and your modified adjusted gross income. The first table below applies if you are covered by a retirement plan at work, and the second table applies if you are not covered by a plan.

Deductible Contributions--Covered by Retirement Plan at Work

Filing StatusModified AGIDeduction
Single or Head of Household$56,000 or lessFull deduction up to the amount of your contribution limit
Single or Head of Householdmore than $56,000 but less than $66,000Partial deduction
Single or Head of Household$66,000 or moreNo deduction
married filing jointly or qualifying widow(er)$89,000 or lessFull deduction up to the amount of your contribution limit
married filing jointly or qualifying widow(er)more than $89,000 but less than $109,000Partial deduction
married filing jointly or qualifying widow(er)$109,000 or moreNo deduction
married filing separatelyless than $10,000A partial deduction
married filing separatelymore than $10,000No deduction

Deductible Contributions--Not Covered by Retirement Plan at Work

Filing StatusModified AGIDeduction
single, head of household, or qualifying widow(er) any amounta full deduction up to the amount of your contribution limit.
married filing jointly or separately with a spouse who is not covered by a plan at work any amounta full deduction up to the amount of your contribution limit.
married filing jointly with a spouse who is covered by a plan at work$167,000 or lessa full deduction up to the amount of your contribution limit.
married filing jointly with a spouse who is covered by a plan at workmore than $167,000 but less than $177,000a partial deduction.
married filing jointly with a spouse who is covered by a plan at work$177,000 or moreno deduction.
married filing separately with a spouse who is covered by a plan at work less than $10,000 a partial deduction.
married filing separately with a spouse who is covered by a plan at work $10,000 or more no deduction.

You’ll notice that in some circumstances, you are permitted only a partial deduction. As you income increases within certain ranges of modified AGI, the amount you can deduct decreases. If you have a tax professional prepare your returns, he or she will have the information necessary to calculate exactly how much you can deduct. If you do your own taxes, programs like TurboTax calculate these deductions quite easily.

Roth IRA contributions are made with after-tax income, so there are no deductions or deduction limits to be concerned with. However, there are strict income limitations on who can contribute to a Roth IRA. As noted above, anybody can contribute to a traditional IRA, although your income may make your contribution non-deductible. With a Roth, if you don’t satisfy the income contribution limits, you can’t contribute at all.

So here is table showing the 2010 income limitations on Roth IRA contributions:

Effect of Modified AGI on Roth IRA Contributions

If You Have Taxable Compensation and Your Filing Status Is...Modified AGIContribution Limits
married filing jointly or qualifying widow(er)Less than $167,000you can contribute up to the limit.
married filing jointly or qualifying widow(er)at least $167,000 but less than $177,000the amount you can contribute is reduced.
married filing jointly or qualifying widow(er)$177,000 or moreyou cannot contribute to a Roth IRA.
married filing separately and you lived with your spouse at any time during the year zero (-0-)you can contribute up to the limit.
married filing separately and you lived with your spouse at any time during the year more than zero (-0-) but less than $10,000 the amount you can contribute is reduced.
married filing separately and you lived with your spouse at any time during the year $10,000 or moreyou cannot contribute to a Roth IRA.
single, head of household, or married filing separately and you did not live with your spouse at any time during the yearless than $105,000you can contribute up to the limit.
single, head of household, or married filing separately and you did not live with your spouse at any time during the yearat least $105,000 but less than $120,000the amount you can contribute is reduced.
single, head of household, or married filing separately and you did not live with your spouse at any time during the year$120,000 or moreyou cannot contribute to a Roth IRA.

Remember that it’s not too late to contribute to an IRA for the 2009 tax year. Generally you can contribute anytime on or before April 15, 2010. Several discount online brokers offer IRA accounts, including Scottrade, OptionsXpress and ShareBuilder.

Visit Mint.com to see which IRA is right for you!

Published or Updated: April 5, 2011

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