You've committed to investing as much money as you can into your IRA and 401(k) this year. But before you begin putting away those dollars, you need to learn exactly how much money you're allowed to put into these retirement vehicles each year. These amounts vary depending on your age and the investment vehicle.
Under IRS rules, most workers are allowed to contribute a maximum of $16,500 to their traditional 401(k) plans in both 2009 and 2010. Those workers who are 50 or older, though, are allowed to contribute an extra $5,500 in both 2009 and 2010 to their plans.
Workers who contribute to a SIMPLE 401(k) plan can put up to $11,500 into them in 2009 and 2010. Workers who are older than 50 can contribute an additional $2,500 each of these years to their SIMPLE 401(k) plan.
Traditional and Roth IRA
For traditional and Roth IRAs, investors who are under the age of 50 at the end of 2009 can contribute $5,000 annually or the amount of their taxable compensation for the year, whichever is smaller.
Those investors who are older than 50 can contribute $6,000 or the amount of their taxable compensation for 2009. Again, they have to contribute whichever of these two amounts is smaller.
A Roth IRA comes with specific income limits. Investors who are married and filing jointly can contribute up to the yearly limits as long as their modified adjusted gross income is $166,000 or less. Those investors whose adjusted gross income is more than $166,000 but less than $176,000 are limited in the amount of contributions they can make. Those whose adjusted gross incomes are $176,000 or higher are not allowed to contribute any money to a Roth IRA.
For single filers, investors who have a modified adjusted gross income of less than $105,000 can contribute to their IRA up to the limits set by the IRS. Those whose adjusted gross income is greater than $105,000 but lower than $120,000 are limited in the amount they can contribute. Single filers with an adjusted gross income of $120,000 or more are not allowed to contribute to a Roth IRA.