For 2009, the maximum contribution to a Roth IRA is $5,000. The full Roth contribution amount will be adjusted for inflation beginning with the 2010 Roth IRA contribution limits.
Taxpayers over age 50, can make a $1,000 catch-up contribution to a Roth IRA, for a total maximum Roth contribution of $6,000.
Roth IRA contributions and traditional IRA contributions are made from the same IRS limit, so an investor may make a total of $5,000 in contributions ($6,000 for those 50 and older) in both IRA accounts. In other words, there are not separate limits for each type of IRA. If a person makes a $4,000 contribution to their Roth IRA, then they cannot contribute more than $1,000 to a traditional IRA in order to stay within the cumulative IRA maximum contribution.
Roth IRA contributions cannot be made by taxpayers with high incomes. The IRS sets income limits for Roth IRAs every year. The Roth IRA income limits for 2009 are $176,000 for married filing joint taxpayers, and $120,000 for single taxpayers. However, contributions to a Roth IRA are phased-out at lower income levels.
In order to make a full 2009 Roth IRA contribution, joint filing taxpayers must have a MAGI below $166,000. Taxpayers filing Single, must have income below $105,000 to make a full Roth IRA contribution in 2009. Taxpayers with modified adjusted gross incomes above these limits, but below the maximum income limit may make a reduced Roth IRA contribution. The amount of phased-out Roth contributions that can be made depends on exactly where within the range the taxpayer falls, with higher incomes allowed smaller deductions.
In 2010, there is a special exception to the usual income limits on who can convert a traditional IRA to a Roth IRA that allows high-income taxpayers to make a Roth IRA conversion when they would normally be prohibited by the income limits.