2020 and 2021 Roth IRA Rules, Contribution and Income Limits

Roth Contribution Limits, Income Phaseouts, Spousal Contributions, and More

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How much can you contribute to a Roth IRA in tax year 2020 and tax year 2021? If you're age 49 or younger, you can contribute up to $6,000. The limit for someone age 50 or older is $7,000 (using your age at the end of the calendar year). There are also limits to the amount of income you can have to contribute to a Roth IRA, depending on your tax filing status.

These limits usually increase slightly per year. The year 2021 is no different, with changes compensating for increases in the cost of living.

Earned Income Rules for 2020 and 2021 Contributions

You must have earned income to make a Roth IRA contribution. The amount of earned income you have must equal or exceed the amount of your Roth IRA contribution.

  • If you have enough earned income, in addition to your own Roth IRA contribution, you may make a Roth IRA contribution for a non-working spouse.
  • If you make too much income, then you are not eligible to make a Roth IRA contribution.

Eligibility to Make a Roth Contribution

If you are married and filing separately, single, or filing as a head of household, you can contribute to a Roth IRA in tax year 2021 up to the limit for your age if your modified adjusted gross income (MAGI) is less than $125,000. The amount you can contribute is reduced if your MAGI is between $125,000 and $140,000. If your MAGI is more than $140,000, you cannot contribute to a Roth IRA.

If you are married and will be filing separately for 2021, and will live with your spouse at any time during tax year 2021, you can contribute a reduced amount to your Roth IRA if you make less than $10,000, but cannot contribute to it if your MAGI more than $10,000.

If you are married filing jointly you can contribute to your Roth IRA if your MAGI is less than $198,000. Your contributions will be reduced if your MAGI is between $198,000 and $208,000. If your MAGI is equal to or greater than $208,000, you cannot contribute to a Roth IRA.

There are some additional Roth IRA contributions you can make if you meet all of the requirements.

Additional Roth IRA Contributions

If you are eligible to make a Roth IRA contribution based on the income limits above, then you can contribute to a Roth IRA in addition to your company-sponsored retirement plan. If your income exceeds the limits above, you may be able to make a non-deductible traditional IRA contribution and then convert it to a Roth IRA a year later.

Roth IRAs offer many advantages such as the ability to withdraw your original contributions at any time without being subject to income taxes or penalties. They also offer significant advantages once you are retired. Most people who are eligible to make a Roth contribution should consider doing so.

If your income is within the limits described above, you may make a Roth IRA contribution for a non-working spouse who has no earned income; it is called a spousal IRA contribution.

If you are making contributions to your and your spouse's IRAs, you should be aware of the deadlines imposed by the IRS.

2021 Contribution Deadlines

The IRS states that you can make contributions until your tax filing deadline. That date for individual filers is typically April 15 but was May 17 in 2021.

The IRS extended the tax filing deadline for 2020 tax returns. The deadline was moved from April 15 to May 17, 2021. The IRS extended the deadline for making 2020 contributions to your Roth IRA to May 17 as well.

You are able to make contributions to your 2021 Roth IRA until April 15, 2022.

One consideration for the contribution deadline is IRA conversions, which do not have deadlines or limits.

Contributions vs. Conversions

When you convert a traditional IRA to a Roth IRA, it is not considered a contribution—so Roth conversion amounts are not subject to the limits above.

Prior to 2010, if your income was over $100,000, you could not convert IRA money to a Roth. This income limit was removed in 2010, allowing you to convert a traditional IRA to a Roth at any time, and there is no maximum on the amount you can convert.

Roth IRAs vs. Designated Roth Accounts

A Roth IRA is different from a Roth 401(k). Roth 401(k)s are referred to as designated Roth accounts, and the income limits described above do not apply to Roth 401(k) contributions. Roth 401(k) contribution limits are the same as regular 401(k) contribution limits. If your employer offers a 401(k) account, you can check with the plan administrator to see whether the plan allows for Roth contributions. Note that you can contribute to both a Roth 401(k) and a regular 401(k) but you can not exceed the annual contribution limits between the two. This limit is $19,500 for 2021 ($26,000 if age 50 or over).

Traditional IRA or Roth IRA

You might not be sure whether to make a regular IRA contribution or a Roth IRA contribution. The traditional IRA may offer a tax deduction for the amount contributed, whereas the Roth does not. However, when you withdraw money from a traditional IRA, you will pay taxes, whereas qualified distributions from a Roth are tax free.

What this means is that you'll either pay taxes on your contributions before they are put into an IRA or when you withdraw funds. You'll have to decide, based on your current and potential future financial circumstances, which method is better for you.

A Roth IRA Can Double as an Emergency Fund

You can always withdraw your contribution amounts from a Roth, and you'll pay no taxes or penalties when you do this. That means a Roth IRA could do double duty as your emergency fund.

Contribution Amounts and Income Limits Are Indexed to Inflation

The amount you can contribute, and the Roth IRA income limits, are both indexed to inflation, which means the higher the inflation rate, the more likely you are to see limits go up. The contribution limits go up in $500 increments. The income limitations go up in $1,000 increments. Historical limits are listed in the table below.

Year Limit If Age 50+ Single MAGI Limit Married MAGI Limit
2021 $6,000 $7,000 $125,000-$140,000 $198,000-$208,000
2020 $6,000 $7,000 $124,000-$139,000 $196,000-$206,000
2019 $6,000 $7,000 $122,000-$137,000 $193,000-$203,000
2018 $5,500 $6,500 $120,000-$135,000 $189,000-$199,000
2017 $5,500 $6,500 $118,000-$133,000 $186,000-$196,000
2016 $5,500 $6,500 $117,000-$132,000 $184,000-$194,000
2015 $5,500 $6,500 $116,000-$131,000 $183,000-$193,000
2014 $5,500 $6,500 $114,000-$129,000 $181,000-$191,000
2013 $5,500 $6,500 $112,000-$127,000 $178,000-$188,000
2012 $5,000 $6,000 $110,000-$125,000 $173,000-$183,000
2011 $5,000 $6,000 $107,000-$122,000 $169,000-$179,000
2010 $5,000 $6,000 $105,000-$120,000 $167,000-$177,000
2009 $5,000 $6,000 $105,000-$120,000 $166,000-$176,000
Historical Roth IRA Limits