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Roth IRA Contribution Limits 2011

A Roth IRA attracts investors because they contribute their after-tax income now in exchange for tax-free withdrawals after retirement. Also, account holders can make premature withdrawals from a Roth IRA with few penalties and restrictions. Roth IRAs can take the form of a self directed IRA real estate account or as a designated solo 401K.
Many investors find the tax benefits of the Roth IRA appealing. Owners of traditional IRAs must pay taxes on their withdrawals as though they were ordinary income. Although many people retire into lower income brackets, they will likely face much higher tax rates when they retire than when they contribute. By accepting the current tax rate, investors pay into a Roth IRA account with expectation that politicians will raise taxes substantially before they reach retirement age.
The government limits individual contributions toward a Roth IRA by including it under its IRA rules. Roth IRA contribution limits 2011 contributions to $5,000 for people under 50 years old and $6,000 for people who are older than 50. They cannot deduct the full amount if their taxable compensation for 2011 is less than the maximum contribution. However, income restrictions also apply.
People with a self directed Roth IRA or solo 401K used as a Roth account may only deduct the full amount of their allowed IRA deductions if their modified adjusted gross income is less than $169,000 for a married person filing jointly. Those whose modified AGI is between $169,000 and $179,000 have their maximum deduction reduced. People who have a modified AGI that is more than $179,000 cannot contribute to a Roth IRA.
Married people who file separately and have lived with their spouse at any time during the year can contribute to a Roth IRA up to the limit if they had a modified AGI of $0. If their modified AGI is greater than $0, but less than $10,000, those individuals qualify for a reduced contribution. If they have a modified AGI greater than $10,000, they cannot make any Roth IRA contributions.
Finally, the IRS says that married individuals who file separately and did not live together at all during the year can contribute up to the limit if they earned $107,000 or less. The IRS reduces their allowed contribution for these individuals if their modified AGI is more than $107,000 and less than $122,000. If their modified AGI is more than $122,000, then they do not qualify for Roth contributions. These rules also apply to those who file as single or as head of household.

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