What Is the Married Couple Limit to an IRA Contribution?

by William Pirraglia

    IRA contribution limits for married couples change on an annual basis. Individual contributions are limited to $5,000 in tax year 2012, and $5,500 in tax year 2013. There are income "phase outs" that affect contribution limits. There are also "catch-up" contributions available for taxpayers age 50 or over before the end of the calendar year, allowing an additional annual contribution of $1,000. Traditional IRAs and Roth IRAs typically have identical contribution limits. Always check with current IRS regulations to use up-to-date information.

    Regardless of IRS permitted maximums, your tax-deductible contributions are limited to the amount you earn. For example, even if you are subject to a $5,500 annual contribution maximum, should you earn only $2,000 in a calendar year, your contribution is capped at $2,000 -- 100 percent of your earnings.

    Although your IRA contribution for the year cannot exceed your earned income, taxpayers who submit tax returns as married filing jointly can take advantage of a spousal exemption, permitting a married couple to make maximum contributions even if one spouse does not work. Contribution limits are controlled by income restrictions. Married couples earning less than $173,000 in adjusted gross income for tax year 2013 can contribute the maximum annual contribution to their IRA. The maximum contribution for joint filers begins to phase out for couples earning more than $173,000 in 2013.

    If you roll over balances from other IRA accounts, you do not have the annual contribution restrictions on the dollar amounts you roll over. Since rollover IRA balances are monies deposited in previous years, the IRS allows you to transfer these balances to different IRA accounts without penalty.

    The IRS limits for annual contributions to traditional and Roth IRAs are the same, but traditional and Roth IRAs work differently for tax purposes. The annual contribution limit is the maximum for all of your IRAs, and the amount of money you contribute to a traditional IRA is tax deductible in the year of your deposits, provided you meet the income requirements are your deduction is not phased out. When you retire or reach age 70 1/2, your withdrawals are taxed as ordinary income. Your contributions to a Roth IRA are after tax, with no deductibility during your contribution years. However, you will enjoy making tax-free withdrawals when you retire. Therefore, you will not be taxed twice.

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    About the Author

    For 34 years Bill Pirraglia served as a senior executive in the banking industry. Since 2005, he has authored articles, blog entries, tips and advice columns, SEO web copy and two published books. He specializes in personal and business finance topics, along with legal articles for clients large and small.

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