IRA Roth Contribution Limits 2018: A Comprehensive Guide

The Internal Revenue Service (IRS) has recently released the contribution limits for Individual Retirement Accounts (IRAs) for 2018. These limits determine the maximum amount of money you can contribute to your IRA each year, and they vary depending on your age and other factors.

Roth IRA Contribution Limits for 2018

Age 49 and Under

• $5,500 ($6,500 if you're over 50)

Age 50 and Over

• $6,500 ($7,500 if you're over 50)

Catch-Up Contributions

If you're age 50 or older, you can make additional catch-up contributions to your IRA. These contributions are above the regular contribution limits and allow you to save more for retirement.

Age 50 and Over

• $1,000

Income Limits for Roth IRA Contributions

Roth IRAs are subject to income limits. If your income exceeds these limits, you may be ineligible to contribute to a Roth IRA or may have to make reduced contributions.

Filing Status | Phase-Out Income Range
---|---|
Single | $122,000 - $137,000
Married Filing Jointly | $193,000 - $203,000
Married Filing Separately | $10,000 - $12,000
Head of Household | $129,000 - $144,000

Benefits of Roth IRAs

Roth IRAs offer a number of benefits, including:

• Tax-free withdrawals: Withdrawals from a Roth IRA are tax-free in retirement, as long as you meet certain requirements.
• No required minimum distributions: You are not required to take minimum distributions from a Roth IRA during your lifetime.
• Estate planning benefits: Roth IRAs can be passed on to your beneficiaries without paying income taxes.

Calculating Your IRA Contribution Limit

To calculate your IRA contribution limit, follow these steps:

1. Determine your modified adjusted gross income (MAGI).
2. Compare your MAGI to the income limits for Roth IRAs.
3. If your MAGI is within the phase-out income range, reduce your contribution limit accordingly.
4. If your MAGI is above the phase-out income range, you are ineligible to contribute to a Roth IRA.

Additional Considerations

Here are a few additional considerations to keep in mind when contributing to a Roth IRA:

• Employer contributions: Employer contributions to your IRA do not count towards your contribution limit.
• Traditional IRA conversions: Converting a traditional IRA to a Roth IRA can trigger income taxes.
• Tax penalties: Withdrawing from a Roth IRA before age 59 1/2 may result in tax penalties.

Conclusion

The IRA Roth contribution limits for 2018 are important to know if you are planning to save for retirement. By understanding these limits and the benefits of Roth IRAs, you can make informed decisions about how to save for your future.

Additional Resources

• IRS: IRA Contribution Limits
• Vanguard: Roth IRA Contribution Limits
• Fidelity: Roth IRA Contribution Limits