Traditional IRA and Roth IRA Contribution Limits

Understanding Current and Historical IRA Contribution Limits

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There's a limit to how much you can contribute to an IRA in a given year. Traditional and Roth IRA contribution limits typically increase with the inflation rate in $500 increments.

The contribution limit doesn't increase in some years if inflation wasn't significant enough to trigger the next increment. An investor can contribute to either a traditional or Roth IRA or split their contributions between the two, but the combined annual contribution can't exceed the overall limit.

The maximum you can contribute across all IRAs is $6,000 for 2020. If you're age 50 or older, you can make a higher contribution of $7,000.

IRA contributions are separate from 401(k) contributions, which have a significantly higher limit.

Traditional IRA and Roth IRA Contribution Limits

This chart details current and historical traditional IRA and historical Roth IRA combined contribution limits. The two columns represent the combined contribution age limits for those 49 years old or younger, and those 50 years or older.

2002-2004 $3,000 $3,500
2005 $4,000 $4,500
2006-2007 $4,000 $5,000
2008 $5,000 $6,000
2009 $5,000 $6,000
2010 $5,000 $6,000
2011 $5,000 $6,000
2012 $5,000 $6,000
2013 $5,500 $6,500
2014 $5,500 $6,500
2015 $5,500 $6,500
2016 $5,500 $6,500
2017 $5,500 $6,500
2018 $5,500 $6,500
2019 $6,000 $7,000
2020 $6,000 $7,000

Traditional IRA contribution limits and Roth IRA contribution limits are written into the U.S. tax code so that they're always identical. 

Traditional IRA Deduction Limits

If you're covered by a retirement plan at work, your contributions aren't limited, but your tax deductions could be depending on your income. The income limits are also based on filing status.

For example, single filers with a modified adjusted gross income (AGI) of $65,000 can deduct their full contribution to a traditional IRA. Married joint filers can take a full deduction if their income is $104,000 or less, and those married filing separately can only make a partial deduction if their income is less than $10,000.

If you don't have a retirement plan at work, there's no deduction limit if you're single or your spouse also doesn't have a retirement plan. If your spouse has access to a retirement plan, your deduction may be limited depending on your income.

Roth IRA Contribution Limits

Roth IRA contributions are limited based on income. For example, if you're married filing jointly, your income must be less than $196,000 to make a full contribution. If your income is more than $196,000 but less than $206,000, you can make a partial contribution, and if it's $206,000 or more, you can't contribute to a Roth.

Single filers must make less than $124,000 to make a full contribution to a Roth IRA, and those married filing separately can't make a full contribution. They can only make a reduced contribution if their income is less than $10,000.

Contribution Deadlines

Neither traditional IRA nor Roth IRA contribution limits can be rolled forward to a future year. There's no option to increase the next year's limit if you don't reach the limit in one year.

The deadline for meeting the contribution limit is the initial tax filing deadline, which is usually April 15 unless this date falls on a weekend. For example, unless there are changes to filing dates, you would have until April 15, 2021 to fund your IRA account for the 2020 tax year.

Ways of Funding Your IRAs

Contributions don't have to be made in one lump sum. You could set up an automatic contribution to your IRA once a week or month, or make periodic, lump-sum contributions.

Assuming you meet the qualifications to contribute to a Roth, you could divvy up your contributions between a Roth and traditional IRA or put funds in just one or the other. A Roth offers tax-free withdrawals once you retire, while a traditional IRA offers tax deductions now. Both options have advantages, and the best option for you depends on your priorities and overall financial situation.

Keep in mind that the combined annual contribution limit always applies. For example, you could contribute a total of $6,000 to either your traditional or Roth IRA without exceeding the contribution limits if you were 28 years old in 2020, but you couldn't contribute $3,000 to a traditional IRA and $3,500 to a Roth.

Exceptions to the Rule

Rollovers from one IRA to another don't count toward your annual contribution limits. You can rollover funds from an IRA of one type to another IRA of the same type. For example, you might move a traditional IRA from one trustee to another because you prefer the fees at the new trustee.

You can also convert a traditional IRA to a Roth IRA. This is referred to as a Roth conversion, and anything you convert could be counted as taxable income. To minimize taxes, you may want to roll over funds gradually over a few years. You can't covert a Roth IRA into a traditional IRA, though.

Rollovers and contribution limits can be complex. For tailored advice, it's best to consult a tax professional.

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