2010 IRA Contribution Limits and Income Limits

Taxpayers not covered by an employee sponsored retirement plan can generally make tax-deductible IRA contributions to a traditional IRA. However, people with retirement plans at work usually must meet certain income limit restrictions in order to deduct traditional IRA contributions.

· Married Filing Joint

o Phase-out of tax-deductible IRA contributions from $89,000 to $109,000

o No tax deduction for traditional IRA contributions for income above $109,000

· Single or Head of Household Filing

o Phase-out of tax-deductible IRA contributions from $56,000 to $66,000

o No tax deductions allowable for traditional IRA contributions when income exceeds $66,000

Limits

The maximum allowable IRA contribution for 2010 is $5,000. However, if you are over age 50, you can make a catch-up IRA contribution of $1,000 for a total contribution of $6,000.

Keep in mind that the IRA limits apply in total to both traditional IRA accounts and Roth IRA accounts. In other words, you can contribute a maximum of $5,000 total to a traditional IRA and a Roth IRA, divided between them any way you like. However, keep in mind that there is an income limit for contributing to a Roth IRA in 2010.

For example, a taxpayer may contribute $3,000 to a Roth IRA and $2,000 to a traditional IRA. This adds up to a total IRA contribution of $5,000 and would be allowable. However, a taxpayer may not contribute $3,000 to a Roth IRA and $3,000 to a regular IRA, because this would add up to $6,000 and exceed the maximum allowable IRA contribution for 2009. However, this would be allowable if the taxpayer were over age 50 because of the catch-up contribution provision.

IRA catch-up contributions may be split across multiple IRAs, but still cannot exceed $1,000 in total.

It is generally easiest to calculate the total allowable IRA contribution and then split that overall amount up in the desired manner.

Further Reading: 2010 401k Contribution Limits