Maximum IRA contributions
Exactly what are the
maximum contribution IRA amounts depend on what year it
is, your age, and the whim of Congress, but it's
important to know them because every dollar you put into
an IRA is spared the tax man's axe. 
- Start the new year off right
by contributing the maximum amount to your to
your individual IRAs (regular IRA and Roth IRA)
first thing in January
- Set up your automated twice-a-month investments to
contribute to your SEP and/or employer-sponsored
plans so that you achieve maximum contribution by
the end of the year
|
| Maximum Allowed Contributions |
| type of
account |
the rules |
what they
mean |
| regular IRA, Roth IRA |
Whether it's to your regular IRA,
Roth IRA, or a combination of both, you can
contribute a maximum total of:
| tax
year |
younger
than 50 |
50 or
older |
| 2002-2004 |
$3,000 |
$3,500 |
| 2005 |
$3,500 |
$4,000 |
| 2006-2007 |
$4,000 |
$5,000 |
| 2008-2012 |
$5,000 |
$6,000 |
| future |
maybe
higher |
|
Contribute half the maximum to your
regular IRA and the other half to your Roth,
because it's difficult to accurately predict the
future. |
| SEP-IRA |
The
SEP contribution limit for the self-employed is
effectively 18.587% of net profit, because net
profit is reduced first by SEP contribution
itself and second by FICA tax. But it's still a
good chunk of change. |
19% for most people. |
| employer-sponsored retirement plan
(401k, 403b, or 457) |
You have to ask your employer,
because different employers have different plans.
Some employers vest: they pay money into your
account to in proportion to your contributions. |
The maximum allowed amount. If they vest, the
plan immediately becomes your highest investment
priority. |
| brokerage |
No
limit. |
As
much as you can, after you've maxed out your
tax-deferred account contributions. |
This table may help you
understand the maximum amounts your allowed to contribute
to your various accounts.
|