How much should I put into an IRA?
- What is an IRA?
- What's the difference between Roth and traditional IRAs?
- Why is an IRA a good deal?
- Who can put money into an IRA?
- How much should I put into an IRA?
- When can I access money in my IRA?
- When are IRA withdrawals penalty-free?
- When do I have to start taking the money out of an IRA?
- What if I need the money in my IRA before retirement?
- How should I invest the money?
- How do my IRA withdrawals get taxed in retirement?
- Where should I open an IRA?
- Should I take money from my IRA to pay off debt
It's generally a good idea to put as much in an IRA as the government allows you to. That's because the more you save in a tax-favored account, the more tax-protected gains you can rack up.
If you're younger than 50, your 2008 contributions to a traditional IRA or a Roth IRA are limited to $5,000 or the total of your taxable compensation, whichever is smaller. If you're 50 or over before the end of the year, you're allowed to contribute up to an additional $1,000 for a total yearly contribution of $6,000; this is the IRS's way of encouraging you to save more in the final years before retirement.
However, the amount you can contribute to a Roth IRA also depends on your income. To make the full contribution, your modified adjusted gross income must be less than $101,000 if you're single, or $159,000 as a married couple filing jointly. If you earn slightly above those amounts, you may be able to make smaller contributions, which phase out after $116,000 and $169,000, respectively.
