IRA Maximum Distribution Rules

IRAs are retirement accounts that allow you save toward retirement while getting a tax benefit. Traditional IRAs grow tax-deferred and allow you to deduct the contribution from taxes, while Roth IRAs grow tax-free with no deduction. The IRS sets limits to annual contributions.

Traditional Contributions

As of 2009, you were allowed to contribute up to $5,000 of earned income to your traditional IRA. The amount of your contribution can be deducted from your adjusted gross income.

Roth Contributions

You can contribute up to $5,000 of earned income into a Roth IRA each year. You are not allowed to deduct this from your income taxes since the money is growing tax-free.

Catch Up Contributions

If you are over 50 years of age, you can contribute an additional $1,000 into either a Roth or traditional IRA. This "catch-up contribution" then allows you to contribute a total of $6,000 annually as you approach retirement.

Contributing to Traditional and Roth

You can contribute to both a traditional and Roth IRA in the same year, but you can contribute only an aggregate value of $5,000. You may deduct the amount in the traditional but not the Roth.

Minimum Contributions

There is no minimum contribution set by the IRS, and you don't have to contribute every year. The investment you contribute your money into may have a minimum requirement based on policy, but not IRS regulations.

References

• IRS - 2009 IRA Contributions