IRA contribution limits

When you first start saving for retirement, you might feel intimidated by all the options out there. And sure, it can be tough to wrap your head around working toward such a long-term goal. But take heart: Progress is really about the baby steps and how consistent you are about your savings.

Of course, one of the initial steps is deciding where to keep your retirement funds and learning about the rules and limits of that account. With Individual Retirement Accounts (IRAs), you’ll encounter two options: traditional and Roth. Each has specific contribution limits, income limits and tax rules (more on that below).

Even if you have an employee-sponsored retirement account, a supplemental retirement account, such as an IRA, can bring you more flexibility and increase your saving power.

What are the contribution limits for a traditional IRA vs. a Roth IRA?

With a traditional IRA, your money grows tax-deferred — meaning you pay taxes on it when you withdraw during retirement. With a Roth IRA, you contribute after-tax earned income, and it grows tax-free.

Whether you’re looking into a traditional or Roth IRA, there are contribution limits and income limits to be aware of.

Essential IRA Contribution Guidelines

Stay on top of current IRA contribution, income and age limits, so you can take full advantage of your IRA — without being penalized for contributing too much. The most common IRA contribution guidelines for 2021 include:

Roth IRA Traditional IRA
Contribution limits $6,000 age 49 and younger; $7,000 age 50 or older Same as Roth IRA
Income limits Income affects how much you can contribute. Income does not affect how much you can contribute.
Age limits Contribute at any age Contribute at any age

 

What are the income limits for traditional IRAs vs. Roth IRAs?

Now that we’ve talked about some of the contribution limits for traditional IRAs vs. Roth IRAs, let’s dive into the specifics of income limits.

With a traditional IRA, income limits determine whether you can deduct your traditional IRA contributions. In other words, if you or your spouse have a retirement plan through an employer, your ability to deduct might change.

If you have a Roth IRA, your contribution will not be deductible — but income limits do determine your maximum annual contribution.

The charts below will help you figure out where you stand. You’ll need two pieces of information: your filing status and your modified adjusted gross income (which you can figure out using the instructions provided in IRS Publication 590-A).

Traditional IRA Income Limits for 2020 and 2021 Deductions

Keep in mind that the income limits below are only applicable to you if you are covered by a retirement plan at work in addition to your IRA.

Filing Status 2020 Modified AGI 2021 Modified AGI Deduction?
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) $65,000 or less $66,000 or less A full deduction
More than $65,000 but less than $75,000 More than $66,000 but less than $76,000 A partial deduction
$75,000 or more $76,000 or more No deduction
Married filing jointly or qualifying widow(er) $104,000 or less $105,000 or less A full deduction
More than $104,000 but less than $124,000 More than $105,000 but less than $125,000 A partial deduction
$124,000 or more $125,000 or more No deduction
Married filing separately (and you did live with your spouse at any point during the year) Less than $10,000 Less than $10,000 A partial deduction
$10,000 or more $10,000 or more No deduction

 

Roth IRA Income Limits for 2020 and 2021 Contributions

Filing Status 2020 Modified AGI 2021 Modified AGI Maximum Contribution
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) Less than $124,000 Less than $125,000 Up to the limit
More or equal to $124,000 but less than $139,000 More or equal to $125,000 but less than $140,000 Reduced contribution
$139,000 or more $140,000 or more Cannot contribute
Married filing jointly or qualifying widow(er) Less than $196,000 Less than $198,000 Up to the limit
More or equal to $196,000 but less than $206,000 More or equal to $198,000 but less than $208,000 Reduced contribution
$206,000 or more $208,000 or more Cannot contribute
Married filing separately (and you did live with your spouse at any point during the year) Less than $10,000 Less than $10,000 Reduced contribution
$10,000 or more $10,000 or more Cannot contribute

Find more information on contribution and income limits on the IRS’ Retirement Plans webpage.
 

Contribution Limits for Multiple IRAs

If you have more than one IRA, no worries. You’re allowed to contribute to more than one IRA in the same year, but the total amount can’t exceed the annual limit set by the IRS, and contributions must be made before the tax deadline. For 2020 contributions that’s May 17, 2021, due to the tax deadline extension.

Learn the details of the IRS’ tax relief in disaster situations, including for severe winter storm victims in Oklahoma and Texas.

What if I reach my IRA contribution limit?

Keep in mind that reaching your annual IRA contribution limit doesn’t mean you have to stop socking money away for retirement. In addition to an IRA or 401(k), if you have access to one through your employer, you can always allocate a savings or investment account to your retirement and keep up with your consistent savings even after reaching the IRA contribution limit. Plus, spreading your retirement funds across different types of accounts could help you manage your taxes as well, since different types of accounts will be taxed differently. It’s best to consult with a tax professional when working through those details.

Knowing the limits of any account is important as you work on your saving strategy, and with these IRA limits in hand, you’re one step closer to being well-prepared for retirement. Whichever IRA you choose — whether traditional or Roth — opening a tax-advantaged retirement account is a smart step to getting serious about saving for those golden years.

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