Roth IRA Phase Out

The majority of people contribute to the Roth IRA in the same manner that they would contribute to a regular IRA.  However, what people might now realize is that the amount you can contribute to a Roth IRA is phased out and can be phased down to zero depending on your level of income.  How do you determine of you are affected by these rules?

Whether or not you are affected by these phase out rules depends on your modified adjusted gross income. The level where the reduction occurs is adjusted each year for inflation, beginning in 2007, and depends on your filing status. Let’s take a look at your filing status and see how these rules will impact your ability to contribute to your Roth IRA. 

If you are single, your contribution limit will be reduced when your modified AGI exceeds $101,000, and completely eliminated when your modified AGI reaches $116,000.

If you are married and file a joint return with your spouse, your contribution limit will be reduced when your joint modified AGI exceeds $159,000, and completely eliminated when your joint modified AGI reaches $169,000.

If you are married and file a separate return from your spouse and you live in separate locations at all times during the year, your contribution limit will be reduced when your modified AGI exceeds $101,000, and completely eliminated when your modified AGI reaches $116,000.  This works basically the same as if you were single.

f you're married and file a separate return, and live with your spouse at any time during the year, your contribution limit will be reduced when your modified AGI exceeds $0, and completely eliminated when your modified AGI reaches $10,000.

As you have noticed there is a pretty big difference between limits for single people and limits for married people.  This is how the law works. It’s best not to think about it too much.