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 and 2021, but you can make an additional catch-up contribution of up to $1,000, for a total of $7,000, if you're age 50 or older.
- The maximum you can contribute across all IRAs is $6,000 for 2021, but you can make an additional contribution of up to $1,000 if you're 50 or older.
- Roth IRA contributions are limited based on income and tax-filing status.
- Neither traditional IRA nor Roth IRA contribution limits can be rolled forward to a future year.
- Rollovers from one IRA to another don't count toward your annual contribution limits.
Traditional IRA and Roth IRA Contribution Limits
This chart details historical traditional IRA and Roth IRA combined contribution limits. The two columns represent the combined contribution age limits for those age 49 and younger, and those age 50 and older.
|TAX YEAR||AGE 49 & BELOW||AGE 50 & ABOVE|
Traditional IRA contribution limits and Roth IRA contribution limits are written into the U.S. tax code so that they're always identical.
IRA contributions are separate from 401(k) contributions, which have a significantly higher limit.
Traditional IRA Deduction Limits
Your contributions aren't limited if you're covered by a retirement plan at work, but your tax deductions could be, depending on your income. The income limits are also based on filing status.
Single filers with a modified adjusted gross income (AGI) of $65,000 in 2020 could deduct their full contribution to a traditional IRA. Married joint filers could take a full deduction if their income was $104,000 or less.
Single filers with a modified AGI of $66,000 can deduct their full contribution in 2021. Married joint filers need an income of $105,000 or less.
There's no deduction limit if you're single, and you don't have a retirement plan at work, or if you're married, and your spouse doesn't also have a retirement plan. Your deduction might be limited, depending on your income, if your spouse has access to a retirement plan.
Roth IRA Contribution Limits
Roth IRA contributions are limited based on income. For example, if you're married and filing jointly, your income had to be less than $196,000 in 2020 to make a full contribution. If your income was more than $196,000, but less than $206,000, you could make a partial contribution, and if it was $206,000 or more, you couldn't contribute to a Roth at all.
Those who are married and filing jointly need an income less than $198,000 in 2021 to make a full contribution. Those with incomes between $198,000 and $208,000 can make a partial contribution, and those with incomes of $208,000 or more can't contribute to a Roth at all.
Single filers had to make less than $124,000 in 2020 ($125,000 in 2021) to make a full contribution to a Roth IRA, and those married but filing separately could only make a reduced contribution if their income was less than $10,000.
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, you would have until April 15, 2022, to fund your IRA account for the 2020 tax year unless there are changes to filing dates.
The IRS extended the 2021 filing date from April 15 to May 17, due to the ongoing COVID-19 pandemic.
Ways of Funding Your IRAs
Contributions don't have to be made in one lump sum. You can set up an automatic contribution to your IRA once a week or once a month or make other periodic contributions.
Assuming you meet the qualifications to contribute to a Roth, you could divvy up your contributions between a Roth and traditional IRA, or you could put funds in just one or the other. A Roth offers tax-free withdrawals when you retire, while a traditional IRA offers tax deductions now. Both options have their advantages, and the better 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 49 years old or younger in 2020. You could split it between the two types of accounts as long as you stayed at or below the limit. You couldn't, however, contribute $3,000 to a traditional IRA and $3,500 to a Roth, which would put you at a total of $6,500, unless you were age 50 or older.
Exceptions to the Rule
Rollovers from one IRA to another don't count toward your annual contribution limits. You can roll funds over 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. You might want to roll over funds gradually over a few years to minimize taxes. You can't convert a Roth IRA into a traditional IRA.
Rollovers and contribution limits can be complex. It's best to consult a tax professional for tailored advice.