Roth IRA Income Limits for 2007
Last fall I wrote about the Roth IRA income limits for 2006 contributions. While this information is still germane (you have until taxes are due to contribute for last year), 2007 is already upon us, and many of us are looking ahead. So… I thought I’d put something together on the 2007 Roth IRA contribution limits. Here goes:
Married Filing Jointly: Roth IRA contributions phase out between $156k-$166k
Single or Head of Household: Roth IRA contributions phase out between $99k-$114k
Married Filing Separately, Living Apart: Roth IRA contributions phase out between $99k-$114k
Married Filing Separately, Other: Roth IRA contributions phase out between $0-$10k
(Note that these numbers all refer to modified adjusted gross income, or MAGI)
As I’ve hinted at elsewhere, there’s a good chance that we’ll exceed the income limit for Roth IRA contributions this year. Thus, we’ve been looking into other options for retirement savings in 2007.
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Modified on January 2nd, 2008 - 12 Comments
Filed under: Saving & Investing, Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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12 Responses to “Roth IRA Income Limits for 2007”
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April 3rd, 2007 at 11:11 am
Are those numbers AGI?
April 3rd, 2007 at 3:09 pm
I live in Ohio and we get whammied because we must file our Ohio state taxes the same way we file federally. For us, our tax bill is lower when we file separately, but that puts our contribution limit for a Roth IRA at $0-$10k. So in order to qualify for a Roth, we file married and pay the extra tax. We figure the tax break on all those earnings will be worth it during retirement.
I think Ohio is the only state that does this.
April 5th, 2007 at 10:40 pm
Hey Nickel,
Have you ever looked offshore for tax benefits? I have only considered offshore as a tax shelter but would love to hear your thoughts/have you done this?
OK, if you don’t want to discuss on your site please visit mine and send me an email.
Would love to talk to you about potential business partnerships…
May 7th, 2007 at 5:01 pm
We also don’t qualify for Roth IRA but I read somewhere that if we contribute to a regular IRA in 2010 we will be able to convert our regular IRA to a Roth IRA as the law that limits Roth IRA to certain incomes expires in 2010. Anyone know anything about this?
May 8th, 2007 at 7:29 am
Yes, assuming that the taxes laws remain unchanged, the income limits for converting are set to go away in 2010. Thus, you can effectively circumvent the contribution limits by contributing now to a non-deductible IRA and then converting in 2010. You will owe taxes on the earnings, but not on the original contributions. But again, this depends on Congress not changing the law or closing the loophole so you’re rolling the dice.
May 17th, 2007 at 10:15 am
What if you contribute $4K to a ROTH and then discover that you’re over the MAGI limit? Like you get a big capital gain or bonus that you weren’t expecting.
I understand the phase-out method, but the Roth $4K isn’t even on my return as a deduction or adjustment that could be phased-out. I can’t really just say “do over” & withdraw it from my ROTH so what is the penalty?
May 17th, 2007 at 10:29 am
Carl, see here. In short, you can recharacterize your contributions, but the earnings will be subject to a penalty.
June 6th, 2007 at 12:26 pm
When opening a Roth IRA for a student, do we use her net or gross income? And what, if any, are the tax consequences of starting a Roth IRA by a student entering college?
February 13th, 2008 at 12:00 pm
What line on the 1040 is MAGI? line 37? Using this line, I am over the 2007 contribution limit.
My problem is that TTAX allows me to throw in about $3400 for both me and my wife before starting to knock down my tax rebate. Doesn’t this mean TTAX is making a mistake, OR, I am looking at the wrong line on the 1040?
February 15th, 2008 at 4:16 pm
I just had my taxes done and my MAGI is over the limit for 2007. We maxed out both of our Roth IRA’s and now I don’t know what I can or should do. MAGI is $173 and I believe the max is 166k. Can I pay the 6% on the $8000 and leave it in? I guess I don’t fully understand how this “excess” works since I believe I am in the category of “You should not have contributed anything into the Roth IRA”….AHHHH!!!!!
H.B. – I was also told it is line 37.
February 15th, 2008 at 6:56 pm
Mike:
You can reverse the contribution – it’s called a re-characterization. Just contact the company with whom you hold the Roth and let them know the situation and they can help you, so you can avoid the 6% penalty; looks like you have to pay a penalty on the earnings, though. Not sure if you convert to a regular IRA if the penalty on earnings applies. I would contact the broker or mutual fund company. You just have to make the adjustment before your tax filing deadline.
March 27th, 2008 at 11:11 pm
Inadvertently overpaid into our Roth’s…is the 6% penalty carried over to next year (when we would not contribute until we are sure we are under the limit)?? Or is it only for this year?
Thanks so much, Toni