How Much Money Can I Contribute to My IRA?

"How much money can I contribute to my IRA?" is a question that more and more people ask every year as they near retirement. Unfortunately, the answer changes often, and it varies depending on the type of IRA you're using.

Limits vary depending on income and tax year.
Your IRA limits may vary depending on your income and other retirement contributions. The IRS also changes limits from time to time, so this year's limits may not be the same as the limits five years from now. If you're not sure about which limits govern your IRA investments, consult a tax professional to find the current limits governing your specific circumstances.

Traditional and Roth IRA limits.
Traditional and Roth IRAs are two very different investment types, but the limits for these investments fall into the same category. Individuals under 50 can contribute $5,000 annually to either a traditional or Roth IRA. People over 50 can contribute up to $6,000 annually to a traditional or Roth IRA.

Roth IRA investors face further limits if their income is above a certain point; typically $105,000 for persons filing single on their tax returns, or $166,000 for persons filing jointly. Single people with income over $120,000 or married individuals filing jointly with an income over $176,000 are not eligible to contribute to a Roth IRA at all. Investment limits vary from year to year; for example, married limits in 2010 increase from $176,000 to $177,000. Consult the IRS for limits based on your specific income and tax situation.

Simple IRA contribution limits.
If you've got a Simple IRA with your employer, you have different contribution limits. The Simple IRA contribution limits for 2009 and 2010 are $11,500 for people under 50, or $14,000 for people over 50.

SEP IRA contribution limits.
If your employer offers a SEP IRA, the limits are based on both an annual limit and your compensation. Employers may contribute up to 25% of your total income to your SEP IRA annually. However, that contribution cannot exceed $49,000 in 2009 or 2010.

Coverdell (Education IRA) contribution limits.
Coverdell contribution limits are governed by both your annual income and the IRS guidelines. If you meet income requirements, you can contribute up to $2,000 annually to a Coverdell account. However, you're only eligible to contribute if you make up to $110,000 as a single individual, or $220,000 as a married couple filing jointly. You may be able to make only a partial contribution starting at $95,000 for singles or $190,000 for married couples filing jointly.