If you plan on making contributions to your Roth IRA or opening a Roth IRA account, you will need to know about updated 2013 Roth IRA contribution limits and income limits. Failing to know about these limits can lead to unexpected taxes and possibly penalties when you attempt to withdraw money from the account.
Many account holders do not know that Roth IRA contribution limits are set by the IRS and change on an annual basis. This is why you need to take time to verify that the limits that you are reviewing on the Internet pertain to the year in question. While you can find the information you are looking for by reading the IRS Publication 590, understanding the bureaucratic language in this publication can be extremely difficult.
Read on and find out everything you need to know about updated 2013 Roth IRA contribution limits and income limits for each tax status without having to decipher the meaning of each phrase you are reading on the official government page.
Various Maximum Contribution Limits in 2013
The maximum contribution limits for Roth IRA account holders may vary depending on your age, your current income, and your tax filing status. Generally, older individuals have the right to contribute more with catch-up contributions. Married account holders also have higher limits than individuals who are filing their taxes as single. Understanding how contribution limits can vary from group to group is extremely important. Here is a breakdown of the maximum contribution limits:
* A maximum of $5500 for the tax year if you are under the age of 50
* A maximum of $6500 for the tax year if you are over the age of 50
While these are the easiest limits to understand, these limits do not apply to everyone. In 2013, the Roth IRA contribution limits will become lower as your income rises. The limits will reach $0 once you reach the maximum income threshold set by the IRS. See how the 2013 Roth IRA income limits will affect you and your spouse by reading on.
2013 Roth Income Limits
Tax Status: Single, Married and Living in Separate Household
If you are filing single, head of household, or married but filing separately, you are subject to the same contribution maximums and income limits. These contribution limits and income limits are as follows based on your age:
* A maximum of $5500 for the tax year if you are over the age of 50 and earn less than $112,00
* A lower contribution limit is set for those making between $112,001 and $127,000. Those exceeding $127,000 may not contribute to a Roth IRA in 2013.
Tax Status: Married Filing Jointly
* A maximum of $5500 for the tax year if you are over the age of 50 and earn less than $178,000
* A lower contribution limit is set for those making between $178,001 and $183,000. Those exceeding $183,000 in income may not contribute to a Roth IRA in 2013.
Now that you know the income and contribution limits for the upcoming year, it is time to budget and determine how much you will contribute. Watch your retirement account grow and contribute as much as you can without exceeding the limits set based on your age, filing status, and income.