IRA Contribution Limits

IRA Contribution Limits

Individuals who are really serious about their retirement, mush have thought of opening an IRA account so they can invest their hard earned money in a most safe and secure way to get maximum benefits and can get maximum return with out paying any tax penalty. There are two most common types of IRA account, Traditional IRA and Roth IRA. Both these accounts and their different terms and conditions and you can choose anyone you want if you fulfill their criteria.

Apart from of the kind of IRA account you decide to open, the Federal government has set an annual investment limit for making investment either you have traditional or Roth IRA. For your convenience, a chart is given below so you can easily know about the maximum limit that both types of IRA accounts allow making investment during the 12- month period. However, due to rising inflation every year, the contribution limit has increased to $500 after 2010 and the further increase in the contribution limit will depend on the level of inflation every year.

Because of the tax benefits of investing by an IRA investment plan, it is usually best to make an effort and make the utmost yearly payment. The kind of investment makes this further significant. However, to understand it in a more convenient way, consider an example. If an individual deposit $3000 in year 2009, he can now deposit $7000 in the year 2010 [$5,000 + $2,000, he cannot invest the preceding year]. You are not allowed to make a payment further than the entire permissible sum during any financial year.

Investment YEAR For AGE 49 And LowerFor AGE 50 And Over
2002-2004$3,000$3,500
2005$4,000$4,500
2006-2007$4,000$5,000
2008-2012$5,000$6,000
2013-2015$5,500$6,500