2009 IRA Contribution Limits

I just published my goals for 2009. One of which is to max out my Roth IRA. The best way to achieve any goal is to plan. In doing my planning I had to look up the contribution rules and limits for 2009 to see if there were any changes from 2008’s contribution limits. The 2009 IRA contribution limits are as follows.

Traditional IRA Contribution Limits

The contribution limits did not change for 2009 as you can contribute up to $5,000. If you will be 50 years old by December 31, 2009 your contribution limit is $6,000. As a married couple, the contribution limits are effectively $10,000 and $12,000 as both you and your spouse are eligible for a traditional IRA.

Traditional IRA contributions have no income limitations, however, there are income limitations for deducting the value of the contribution.

Traditional IRA Deduction Limits

Deduction limits only apply if you are covered by an employer retirement plan. These deduction limits have not changed in 2009. If you’re unmarried, your contribution deductibility begins to phase out if your adjusted gross income (AGI) exceeds $53,000 and completely phases out at $63,000. If you’re married and both you and your spouse is covered by an employer retirement plan, your contribution deductibility begins to phase out if your joint AGI exceeds $85,000 and completely phases out at $105,000.

It gets slightly complicated if only one spouse is covered by an employer retirement plan. For the covered spouse, the contribution deductibility begins to phase out if your joint AGI exceeds $85,000 and completely phases out at $105,000. For the non-covered spouse, the contribution deductibility begins to phase out if your joint AGI exceeds $159,000 and completely phases out at $169,000.

Roth IRA Contribution Limits

The contribution limit for a Roth IRA also did not change and is $5,000. If you will be 50 years old by December 31, 2009 your contribution limit is $6,000. As a married couple, the contribution limits are effectively $10,000 and $12,000 as both you and your spouse are eligible for a traditional IRA.

As opposed to the traditional IRA, the Roth IRA has income limitations for contributions. The income limitations have changed for 2009 so take note. For unmarried individuals, the contribution limit begins to phase out with an AGI of $105,000 and completely phases out at $120,000. For married individuals, the contribution limit begins to phase out with a joint AGI of $166,000 and completely phases out at $176,000.

Conclusion

Even though 2008 is officially in the books, you can still contribute to a 2008 IRA up until the tax filing deadline of April 15. After 2009, the IRA contribution limits will be indexed to inflation, which will make IRAs very powerful investment vehicles.