How Much Can You Contribute to a Traditional IRA in 2020?

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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You can contribute $6,000—or $7,000 if you're age 50 or older—to an IRA in the tax year 2020. This amount is unchanged from the contribution limits in the tax year 2019. 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. There are contribution limits, however. 

Unlike traditional IRAs that are funded with pretax 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 because it was already taxed before you made your contributions.

Dollar Limits for Contributions 

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) or your taxable compensation for the year if your compensation was less than this dollar limit.

Contribution Requirements 

You can make regular contributions to a traditional IRA up to age 70 1/2, provided that you have earned income. If you're age 50 or older, you can make catch-up contributions of an additional $1,000 in 2020. These age thresholds and limits were the same in the tax year 2019.

Roth IRAs have no age restrictions.

For IRA purposes only, earned income consists of wages reported on a W-2, self-employment income from a business or farm, commissions, bonuses, alimony, and nontaxable combat pay. Earned income does not include earnings and profits from property, interest and dividend income, pension or annuity income, deferred compensation, income from certain partnerships, and any amounts you exclude from income.

Deadlines for Making Contributions

You can contribute funds to your traditional IRA at any time during the calendar year, and you can also make contributions to an IRA by the first deadline for your tax return, not counting any extensions you might take. For example, IRA contributions for the tax year 2019 are due by April 15, 2020, while IRA contributions for the tax year 2020 will be due by April 15, 2021.

Where to Claim the Tax Deduction

Report your tax-deductible IRA contribution directly on the first page of Form 1040. You don't have to itemize to claim this 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 Phaseouts

Contributions to a traditional IRA might be fully deductible, partially deductible, or entirely nondeductible, depending on whether you and/or your spouse are covered by a retirement plan through your employer.

A taxpayer's income determines whether his IRA deduction will be limited if he's covered by a retirement plan at work. Retirement plans at work may include 401(k) plans, 403(b) plans, and pensions.

You can contribute to a traditional IRA regardless of whether you participate in another retirement plan through your employer or business, but you might not be able to deduct all your traditional IRA contributions if you or your spouse participates in another retirement plan with an employer.

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 2020. For the tax year 2020, the MAGI phase-out ranges are:

  • Single or head of household: More than $65,000 but less than $75,000
  • Married filing jointly or qualifying widow(er): More than $104,000 but less than $124,000
  • Married filing separately: Less than $10,000

If you were covered by a retirement plan at work in the 2019 tax year, the MAGI phase-out ranges are:

  • Single or head of household: More than $64,000 but less than $74,000
  • Married filing jointly or qualifying widow(er): More than $103,000 but less than $123,000
  • Married filing separately: Less than $10,000

You can determine your MAGI by adding back to your adjusted gross income (AGI) 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 $196,000 but less than $206,000 for the tax year 2020. For the tax year 2019, your deduction is phased out if your MAGI is more than $193,000 but less than $203,000.

2020 Income Limitations If Covered by a Plan at Work

The chart below may help you figure out if your IRA deduction is limited after you've determined your MAGI.

Filing Status MAGI from:  MAGI to:
Single $65,000 $75,000
Head of household $65,000 $75,000
Qualifying widow(er) $104,000 $124,000
Married filing separately and the spouses do not live apart all year $0 $10,000
Married filing separately and the spouses do live apart all year $65,000 $75,000
Married filing jointly for the spouse who is covered by a retirement plan $104,000 $124,000
Married filing jointly for the spouse not covered by a retirement plan at work, but the other spouse is $196,000 $206,000
     
Is your MAGI less than the "from" amount? In between the "from" and "to" amounts? More than the "to" amount?
Full deduction Partial deduction No deduction

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