How Much Can You Contribute to a Traditional IRA in 2021?

Contribution Limits and How Much You Can Deduct

Woman sits at a dining table using a calculator to determine her traditional IRA contribution percentage

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An individual retirement account (IRA) is a tax-advantaged investment account that people can use to save for retirement. It comes with certain tax breaks, but it also comes with rules about how much you can contribute to the IRA and when you can start withdrawing from it.

There are a few different types of IRAs, one of them being a traditional IRA. Here's how much money you can contribute to a traditional IRA.

IRA Contribution Limits

You can contribute $6,000 to your IRAs in the 2021 tax year. If you're at least 50 years old, then you're allowed to make an additional "catch-up contribution" of $1,000 for an annual total of $7,000. Contributions to a traditional IRA are tax-deferred, so you won't pay income tax on the money you invest until you withdraw it and its earnings. You can begin withdrawing from retirement accounts without penalty once you reach age 59 1/2.

You must have earned income throughout the year in order to make IRA contributions. These sources of income include wages reported on a W-2, self-employment income from a business or farm, commissions, bonuses, alimony, and nontaxable combat pay. However, people with low levels of taxable income may not be able to contribute the full $6,000 (or $7,000). If your total taxable income falls below those limits, then your total taxable income becomes your IRA contribution limit.

If you have multiple IRAs, such as one traditional and one Roth, the contribution limit is an annual total across all your IRAs. You can contribute to a traditional IRA, a Roth IRA, or both, but the total annual contributions to all your traditional and Roth IRAs cannot be more than $6,000 ($7,000 if you’re age 50 or older).

Unlike traditional IRAs that are funded with pre-tax dollars, Roth IRA contributions are made with after-tax dollars. You won't have to pay income taxes on this money when you withdraw it (including capital gains), because it was already taxed before you made your contributions.

Deadlines for Making Contributions

You can contribute funds to your traditional IRA at any time from the start of the calendar year up until the first deadline for your tax return. (Any personal extensions you might take on your taxes don't affect your window for contributing to your IRA.) For example, someone could begin contributing to their IRA for the tax year 2021 on January 1, 2021, and they could continue contributing to it until April 15, 2022.

The IRS has extended deadlines for 2020 tax year contributions. You now have until May 17, 2021, to contribute to your IRAs for the 2020 tax year.

Where to Claim the Tax Deduction

Report your tax-deductible IRA contribution directly on Schedule 1 of Form 1040. You don't have to itemize to claim this IRA deduction. It's an adjustment to income, so you can take it in addition to itemizing or claiming the standard deduction for your filing status.

IRA Deduction Limits

Depending on your annual income and workplace retirement plan options (such as a 401(k) plan), your IRA deduction limits may be lower than your contribution limits. Contributions to a traditional IRA might be fully deductible, partially deductible, or entirely nondeductible.

Your ability to deduct contributions doesn't impact your ability to contribute to a traditional IRA. Even if you can't deduct anything, you can still contribute up to your annual limit. This is different from Roth IRAs, which have income limits to an individual's ability to contribute.

You won't be able to deduct all your contributions if you're covered by a retirement plan at work and have a certain modified adjusted gross income (MAGI) and filing status in 2021. For the tax year 2021, the MAGI ranges that allow you to deduct some—but not all—of your IRA contributions are:

  • Single or head of household: More than $66,000 but less than $76,000
  • Married filing jointly or qualifying widow(er): More than $105,000 but less than $125,000
  • Married filing separately: Less than $10,000

You can determine your MAGI by adding your adjusted gross income (AGI) to any deductions you took for student loan interest, foreign earned income and housing exclusions, savings bond interest, and employer adoption benefits.

If you're married, and your spouse is covered by a retirement plan at work, but you're not, and you live together or file a joint return, then your deduction is phased out if your MAGI is more than $198,000 but less than $208,000 for the tax year 2021.