Traditional IRA and Roth IRA Contribution Limits
The IRS deadline for the 2012 tax year contributions is April 15th 2013.
For 2012 the amount you are allowed to contribute to the combination of all your traditional and Roth IRAs is $5,000 ($6,000 if you are over the age of 50) or the total of your taxable income for the year, whichever is the smaller.
For 2013 the amount you are allowed to contribute to the combination of all your traditional and Roth IRAs is $5,500 ($6,500 if you are over the age of 50) or the total of your taxable income for the year, whichever is the smaller.
Traditional IRAs and Roth IRA contribution limits do not apply to rollovers. A tax free rollover occurs when you take the distribution from one IRA or retirement plan and contribute those funds to another IRA or retirement plan. This is often the case with old individual 401Ks from previous employers. The average person has a number of different jobs during their working lifetime which often results in one or more 401K from previous employers. Most people would prefer to consolidate these into a new Gold IRA which gives you control over the different types investments available to you.
Individual 401K rollovers or 403(b) rollovers are 100% tax free and are very easy to initiate but it is important to fully understand all of your options. We have put together a page called 401K Rollover Guide which explains all four options in detail. Also, take a look at Gold IRA Investment Funding which shows all the tax effective ways to invest in gold for retirement including Traditional IRAs, Roth IRA contributions, transfers and 401K rollovers.
Traditional IRA Tax Deduction – A Traditional IRA is most beneficial to people who do NOT have a retirement plan at work. In this situation, with a Traditional IRA you are eligible for a full IRS tax deduction up to the amount of your IRA contribution limits regardless of your income. The exception is where you are married and filing jointly with a spouse who IS covered by a retirement plan at work and your modified adjusted gross income (modified AGI) is greater than $173,000.
Adjusted gross income (AGI) is your total income less reductions. Your taxable income is AGI less your allowances for personal exemption and your itemized deductions. If your modified AGI is more than $173,000 but less than $183,000 you can take a partial deduction but if it is $183,000 or greater then you are not eligible for any IRA tax deduction. If you DO have an individual 401(k), 403(b), 457 or similar type plan at work then it is more advantageous to have a Roth IRA instead of Traditional.
Roth IRA Tax Deduction – The Roth IRA rules are very different and Roth IRA contributions are not eligible for IRA tax deduction. The purpose of a Roth IRA as opposed to a Traditional IRA is that you can invest with funds which you have already paid tax on so your investment can grow tax free and when you retire your income from a Roth IRA will also be tax free. This is very beneficial if you predict that you will be in a higher tax bracket by the time you retire.
With a Traditional IRA, if you also have a retirement plan at work similar to a 401(k), 403(b) or 457 and you are unable to make a full IRA tax deduction because of your status or income it is essential that you contribute to a Roth IRA instead of a Traditional IRA. If you currently have a Traditional IRA and wish to transfer it to a Roth Gold IRA the process is very fast and easy.
A Gold IRA rollover or transfer is 100% tax free and IRS approved. We have already assisted many hundreds of clients with this process and we can take care of everything for you. If you would like to open IRA, need clarification or have any further questions just call us on 1-855-682-1046 Monday to Friday, 7:00 AM to 6:00 PM PST.