Roth IRA vs Traditional IRA Contribution Limit Calculator

ira roth vs traditional iraRoth IRA vs Traditional IRA contribution limit calculator is going to take away the hardship of taxpayers to remember various conditions and thresholds that finally determine  the limit of ira contribution !Earlier  readers were made aware of four good points about IRA contribution limits. which is as under :

IRA contribution limit

For 2015, 2016, 2017 and 2018, your total contributions to all of your traditional and Roth IRAs cannot be more than:

  • $5,500 ($6,500 if you’re age 50 or older), or

  • your taxable compensation for the year, if your compensation was less than this dollar limit.

Roth IRA vs Traditional IRA

Both traditional IRA and Roth IRA are individual retirement Accounts  to save and grow wealth for retirement age . While  under the Traditional IRA , you pay tax on any accretion to the IRA investment at the time of withdrawal which is possible after you become 59.5 years old Roth IRA kitty is fully tax exempt . In other words , Roth IRA lets you  grow tax-free retirement kitty .

The second major difference , as far as taxation is concerned i , IRA  (Roth) contribution can not be deducted from gross income . In other words, no tax deduction is allowed for contribution to IRA (Roth) .But the  traditional IRA contribution gets you tax deduction ( above the line deduction ) depending upon the fact

But ,the government has also placed certain limitations on the quantum of contribution one can do under Traditional IRA . Please read the article on limit of contribution to IRA.

The Calculator

Please test Roth IRA  contribution calculator 2017 and comment about any anomaly in accuracy !

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Logic behind IRA tax savings calculator

Interested to know the ira contribution rules applied to aforesaid tax calculator? Then lets us refer the IRS help which is the basis for the aforesaid calculator. It has two  basic computation

  • Roth IRA Contribution
  • Traditional IRA tax deductible amount

Limit on Roth IRA Contributions For 2017

Contribution limit.(explained in first paragraph above)​

If your filing status is… And your modified AGI is… Then you can contribute…
married filing jointly or qualifying widow(er)

 < $186,000

 Upto Contribution limit.(explained in first paragraph above)

 > $186,000 but < $196,000

 a reduced amount

 >  $196,000

 zero
married filing separately and you lived with your spouse at any time during the year

 < $10,000

 a reduced amount

 > $10,000

 zero
single, head of household, or married filing separately and you did not live with your spouse at any time during the year

 < $118,000

Upto Contribution limit.(explained in first paragraph above)

 > $118,000 but < $133,000

 a reduced amount( see Note below )*

 > $133,000

 zero

*Computation of reduced Roth IRA contribution

If the amount you can contribute must be reduced, figure your reduced contribution limit as follows.

  1. Start with your modified AGI.
  2. Subtract from the amount in (1):
    1. $186,000 if filing a joint return or qualifying widow(er),
    2. $-0- if married filing a separate return, and you lived with your spouse at any time during the year, or
    3. $118,000 for all other individuals.
  3. Divide the result in (2) by $15,000 ($10,000 if filing a joint return, qualifying widow(er), or married filing a separate return and you lived with your spouse at any time during the year).
  4. Multiply the maximum contribution limit (before reduction by this adjustment and before reduction for any contributions to traditional IRAs) by the result in (3).
  5. Subtract the result in (4) from the maximum contribution limit before this reduction. The result is your reduced contribution limit.

See Publication 590-A, Contributions to Individual Retirement Accounts (IRAs), for a worksheet to figure your reduced contribution.

2. Tax deductible part of contribution to Tradition IRA

Two ira contribution rule for tax deduction are different for  two types of cases

 

  • If You ARE Covered by a Retirement Plan at Work
  • If You Are NOT Covered by a Retirement Plan at Work

IRA Tax Deduction for  If You ARE Covered by a Retirement Plan at Work

If Your Filing Status Is… And Your Modified AGI Is… Then You Can Take…
single or
head of household
$62,000 or less a full deduction up to the amount of your contribution limit.(explained in first paragraph above)
more than $62,000 but less than $72,000 a partial deduction.
$72,000 or more no deduction.
married filing jointly or qualifying widow(er) $99,000 or less a full deduction up to the amount of your contribution limit.(explained in first paragraph above)
more than $99,000 but less than $119,000 a partial deduction.
$119,000 or more  no deduction.
married filing separately less than $10,000  a partial deduction.
$10,000 or more  no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “Single” filing status.

IRA Tax Deduction If  You Are Not Covered by a Retirement Plan at Work

If you’re not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction.

If Your Filing Status Is… And Your Modified AGI Is… Then You Can Take…
single, head of household, or qualifying widow(er) any amount a full deduction up to the amount of your contribution limit.
married filing jointly or separately with a spouse who is not covered by a plan at work  any amount a full deduction up to the amount of your contribution limit.(explained in first paragraph above)
married filing jointly with a spouse who is covered by a plan at work $186,000 or less a full deduction up to the amount of your contribution limit.(explained in first paragraph above)
more than $186,000 but less than $196,000 a partial deduction.
$196,000 or more no deduction.
married filing separately with a spouse who is covered by a plan at work less than $10,000 a partial deduction.
$10,000 or more no deduction.

Please give  a feedback if any error is found in IRA Roth vs Traditional IRA Contribution  calculator.

 

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