What is the maximum amount that can be contributed to an IRA?
The IRS has spelled out two sets of rules when it comes to the maximum contributions that can be made to a traditional IRA. The first is the “standard” contribution limits. In 2006 and 2007, the standard contribution limit for a traditional IRA is $4,000. In 2008 and 2009, the standard contribution for a traditional IRA increases to $5,000. In addition to the standard contribution, there is also a catch-up contribution limit. If you’ve reached age 50 or older in the calendar year, then you are eligible for an additional catch-up contribution of 1,000 in 2006 and 2007. This means your total contribution in the years 2006 and 2007 is $4,000 + $1,000 or $5,000. In 2008 and 2009, the catch-up contribution remains at $1,000; however because of the increase to the standard contribution those ages 50 and older can contribute $5,000 + $1,000 or $6,000. In the years 2010 and beyond, these limits will be increased with an index of inflation.
