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I am planning to contribute to a ROTH IRA to have a better control on my tax free trading. However I need to know as a single person, if there are certain salary limits to be eligible to make contributions to a ROTH IRA. I would like to know for both these scenarios:

  1. Employer has a 401K retirement plan
  2. Employer does not have a 401K retirement plan.

Thank you.

adi
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2 Answers2

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There is an income limit for Roth IRA contributions (or more specifically, there is an income-based phaseout range, over which the annual contribution limit gradually drops from $6000 to $0). You can see the phaseout ranges for 2021 here.

It's worth mentioning that even if you are over the income limit for direct Roth IRA contributions, you may still be able to do a "backdoor Roth IRA contribution". This is where you contribute to Traditional IRA, and then convert it to Roth IRA. Neither Traditional IRA contributions nor Roth IRA conversions have income limits. If you do not have any existing pre-tax money in Traditional/SEP/SIMPLE IRAs (and do not contribute or rollover any pre-tax money into Traditional/SEP/SIMPLE IRAs for the rest of the year), then you will not have to pay any tax in the "backdoor Roth IRA contribution" process, and the result will be essentially identical to a direct Roth IRA contribution.

user102008
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According to the IRS the Amount of Roth IRA Contributions That You Can Make For 2021

For a single:

And your modified AGI is...   Then you can contribute...
< $125,000                      up to the limit
> $125,000 but < $140,000       a reduced amount
> $140,000                      zero

The limit for 2021 is $6,000 ($7,000 if you're age 50 or older). That amount has to cover Traditional and Roth IRA contributions.

The availability/usage of a 401(k) plan doesn't change the Roth rules, but it does impact the deductiblity of Traditional IRA contributions.

mhoran_psprep
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