IRA Limits on Contributions and Income

Find out how much you can contribute to these unique savings vehicles

IRA account egg sitting in a nest.
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Individual Retirement Accounts (IRAs) can help boost your savings for retirement, provided that you adhere to the rules. The amount you can contribute to a traditional or Roth IRA in 2020 is generally $6,000 for those age 49 and under. However, your age, income, and other retirement accounts may allow you to save more—or require you to contribute less.

The contribution limits discussed do not apply to SEP IRAs or SIMPLE IRAs.

IRA Contribution Limits

The amounts in 2020 are the same for both traditional IRAs, which are tax-deductible, and Roth IRAs, which are not tax-deductible. Total contributions to traditional IRAs and Roth IRAs cannot exceed the lesser of:

  • $6,000 ($7,000 in "catch-up" contributions for taxpayers aged 50 or older)
  • Your annual taxable compensation

These amounts remain unchanged from the IRA contribution limits for 2019.

The combined contribution limit grants you the ability to contribute to either a traditional IRA or a Roth IRA. Or, you can contribute a partial amount to both, as long as you don't exceed the dollar limits above. For example, you can contribute $6,000 to a traditional IRA or $2,000 to a traditional IRA and $4,000 to a Roth IRA.

IRA Income Rules

In order to contribute to an IRA, you must meet the compensation threshold and not exceed the income limits.

IRA Minimum Income

You must earn compensation to make a contribution to either a traditional IRA or a Roth IRA. For the purposes of an IRA, compensation includes:

  • Wages
  • Salaries
  • Commissions
  • Self-employment income
  • Taxable alimony
  • Non-taxable combat pay

It doesn't include:

  • Income from real estate, including property income, interest income, and dividend income
  • Income from pensions or annuities
  • Compensation that was deferred in a prior year
  • Income from non-income-producing partnerships
  • Income from Conservation Reserve Programs (CRPs)
  • Other amounts you don't include as income, such as foreign earned income

In addition, the amount of compensation must equal or exceed the amount of your IRA contribution. This means that if you're retired and no longer earning compensation, you can't make an IRA contribution, although you can still roll over or transfer money from a 401(k) to an IRA.

You can also make an IRA contribution for a non-working spouse who has no compensation, as long as you are married and filing jointly and your compensation is equal to or greater than your contribution amount. This is referred to as a spousal IRA contribution.

IRA Maximum Income

You can contribute to a traditional IRA regardless of your income. Your Roth IRA contribution limit, however, depends on your modified adjusted gross income (AGI) and filing status:

  • You can put in up to the IRA contribution limit if your modified AGI is less than $124,000 if your filing status is single or $196,000 if you are married filing jointly.
  • You can contribute a reduced amount if your modified AGI is between $124,000 and $139,000 as a single or between $196,000 and $206,000 as a married couple filing jointly. You can use Worksheet 2-2 in IRS Publication 590-A to calculate the reduced contribution limit.
  • You can't contribute any amount to a Roth IRA if your modified AGI is at or above $139,000 as a single or $206,000 as a couple filing jointly.

IRA rollovers and transfers don't count as "contributions," so they won't affect your ability to fund an IRA.

IRA Age Limits

You must stop making contributions to a traditional IRA in the year you reach age 70.5. No such age cutoff applies to Roth IRAs, so you can continue contributing to these IRAs at or beyond age 70.5 as long as you continue to receive compensation.

IRA Deduction Limits

You can't deduct any of your contributions to Roth IRAs. This is because you contribute to these accounts with post-tax dollars and withdraw from them on a tax-free basis in retirement.

Traditional IRA contributions are tax-deductible in part or whole in the contribution year because you pay into them with pre-tax dollars and pay tax on them at the time of withdrawal. Your deduction depends on your enrollment in an employer-sponsored retirement plan.

Deduction Limits When Not Enrolled in a Company Plan

Your filing status and income dictate how much of your traditional IRA contribution you can deduct if you also participate in a work retirement program.

You can deduct the contribution in full when:

  • You have any modified AGI and your filing status is single, head of household, or married filing jointly or separately with a spouse who isn't enrolled in a company retirement plan.
  • You have a modified AGI of $196,000 or less if married filing jointly with a spouse who is enrolled in a company retirement plan.

You can take a partial deduction when:

  • You have a modified AGI of between $196,000 and $206,000 if married filing jointly with a spouse enrolled in a company plan.
  • You have a modified AGI of less than $10,000 if married filing separately with a spouse enrolled in a company retirement plan.

You can't deduct the contribution when:

  • You have a modified AGI of $206,000 or more if married filing jointly with a spouse enrolled in a company plan.
  • You have a modified AGI of $10,000 or more if married filing separately with a spouse enrolled in a company retirement plan.

You can use Worksheet 1-2 in IRS Publication 590-A to calculate partial IRA deductions.

Deduction Limits When Enrolled in a Company Plan

Your traditional IRA contribution deduction is also limited if you contribute to a work retirement account.

You can deduct the contribution in full when:

  • You have a modified AGI of $65,000 or less and your filing status is single or head of household.
  • You have a modified AGI of $104,000 or less if married filing jointly.

You can take a partial deduction when:

  • You have a modified AGI of between $65,000 and $75,000 if your filing status is single or head of household.
  • You have a modified AGI of between $104,000 and $124,000 if married filing jointly.
  • You have a modified AGI of less than $10,000 if married filing separately.

You can't deduct the contribution when:

  • You have a modified AGI of $75,000 or more if your filing status is single or head of household.
  • You have a modified AGI of $124,000 or more if married filing jointly.
  • You have a modified AGI of $10,000 or more if married filing separately.

You can still make contributions to traditional IRAs even if your contribution isn't deductible. For example, you can make IRA contributions if you and/or your spouse participate in a company-sponsored retirement plan, such as a 401(k), even if they are not deductible. The funds in the account will grow tax-deferred until you take a withdrawal, which means there is still a benefit in contributing to them.

IRA Contribution Deadlines

You have until April 15, 2021 to make your 2020 IRA contributions. The April deadline remains unchanged from the deadline for 2019 IRA contributions. However, it's useful to save early, as the earlier you put in money according to the IRA contribution limits above, the more time your money has to grow on a tax-deferred basis.