As a motivator to help you save more for retirement this year, I thought I would post the 2010 contribution limits for Traditional and Roth IRAs. Will you contribute up to the max this year for one of these accounts?
2010 Contribution Limits
For 2010, the most that can be contributed to your Traditional or Roth IRA generally is the smaller of the following amounts:
- $5,000 ($6,000 if you are age 50 or older), or
- Your taxable compensation for the year.
This contribution limit is the same as the last 2 tax years. It didn’t increase for inflation. Keep in mind, this contribution limit is doubled, of course, if you file your taxes married, filing jointly. It should also be noted that you have until you file your 2010 taxes or April 15, 2011 to meet these maximum contribution limits. While we’re on this topic, I should note that you still have time to meet the 2009 Traditional and Roth IRA Contribution Limits.
My Retirement Accounts
I’ve had a Traditional IRA since 2002. It was a great account to help me avoid hundreds in taxes during my early twenties. The Traditional IRA gave way to the 401(k), which you can’t contribute to at the same time as the Traditional IRA. Then, in 2009, I finally opened my first Roth IRA, which I can contribute to, along with my 401(k), as they are taxed differently.
Need a good reason to start a Roth IRA? Check out 10 Reasons to Get Off Your Butt and Start a Roth IRA.
The Importance of the IRA
The contribution limits aren’t that high for IRAs. Not like a 401(k). That, in my opinion, makes it far more important to take advantage of the annual IRA contributions. Every year you pass this up is another year you can’t contribute a tax-advantaged sum to your retirement. A 401(k) is more forgiving. With the 401(k)’s high contribution limit, you’d be able to catch up quicker with your tax-advantaged retirement savings if you started later in life. Not to say you shouldn’t also contribute to your 401(k) to at least get the match from your employer.