Life and Death Planning for Retirement Benefits

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Chapter 5: Roth Retirement Plans 237
contributed to all of a person’s traditional IRAs for a particular year is the lesser of a particular
dollar amount (called in this book the “Applicable Dollar Limit”) or the individual’s compensation
income for the year. The maximum regular contribution for a particular year to all of a
person’s Roth IRAs is the exact same amount—minus the amount of regular contributions made
to any traditional IRA(s) for that person for that year.
The Applicable Dollar Limit is the general dollar limit, plus (if the individual is age 50 or
older as of the end of the year) the “catch-up contribution.”
The general dollar limit is $5,000 for the years 2008–2011, to be increased by cost-of-
living adjustments (COLA) if there is sufficient inflation in future years. see
Notic 2009-50 IRB 848, and The catch-up contribution (permitted
only for the 50-and-older set) is $1,000 for 2006 and later years (with no COLA)
An individual who has compensation income , and who meets the other eligibility
requirements (see for Roth IRAs, for traditional IRAs) may contribute to either a
traditional IRA or a Roth IRA (whichever he is eligible to contribute to), or both if he is eligible
to contribute to both, provided that the total contributed to both types of accounts for the year may
not exceed the lesser of (1) the Applicable Dollar Limit or (2) the individual’s compensation
income for the year.
Contributions made on the individual’s behalf to a SEP-IRA or a SIMPLE are
ignored for this purpose; these are considered employer contributions, and as such have no effect
on the maximum the individual may contribute to his own traditional or Roth IRA.
5.3.04 Who may make a “regular” Roth IRA contribution
Any individual who has compensation income may make a “regular”
contribution to a Roth IRA—provided that his income is below certain levels.
A. No age limit. There is no maximum age for contributing to a Roth IRA, as there is for
contributions to a traditional IRA; a taxpayer can contribute to a Roth IRA even after age
70½ compare
B. Participation in an employer plan is irrelevant. An otherwise-eligible person who meets
the income test may contribute to a Roth IRA regardless of whether he also participates in
a retirement plan at his place of employment. Active participation in an employer plan is
relevant only for determining whether a contribution to a traditional IRA is deductible. See
C. Income must be below certain levels. Only an individual whose “modified adjusted gross
income” (MAGI) is below certain limits can legally make a regular contribution to a Roth
IRA. Unlike the income limit formerly applicable to Roth conversions, the
income limit applicable to making “regular” Roth IRA contributions did not disappear at
the end of 2009.
The definition of MAGI for purposes of the Roth IRA income limits starts with the MAGI
definition used under (income limits for making a deductible contribution to a
traditional IRA when the individual is also a participant in an employer plan). However, MAGI
for purposes of Roth contribution eligibility does NOT include the deemed distribution amount