Individual Retirement Accounts (IRA) 101
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The 2019 IRA contribution limit is $6,000 for people under 50, up from $5,500 in 2018. But there are additional restrictions that will impact some people.
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2018 and 2019 IRA contribution limits
The 2019 combined annual contribution limit for Roth and traditional IRAs is:
Under age 50: $6,000 (up from $5,500 in 2018).
Age 50 or older: $7,000 (up from $6,500 in 2018).
But both traditional and Roth IRAs also impose restrictions in certain circumstances:
Roth IRA contribution limits: The amount you can contribute is reduced — and eventually eliminated — at higher incomes.
Traditional IRA deduction limits: You can always contribute the full amount, but your ability to deduct contributions may be reduced or eliminated if you or your spouse has a 401(k) or other retirement plan at work and contributions were made for the plan year (this includes employer contributions).
Here’s the full breakdown of those limits and phaseouts for both traditional IRAs and Roth IRAs, which are based on your modified adjusted gross income.
Exceptions to IRA contribution limits
This is the IRS, so you’re probably not surprised to hear there are a couple caveats you should know about.
You generally can’t contribute more than you earn. If your taxable compensation for the year is $4,000, that’s also your IRA contribution limit.
If you’re a nonworking spouse, you can have what’s called a spousal IRA as long as your spouse earns enough to cover the contribution.
That means if you both want to contribute the maximum to an IRA for 2019, and you’re both under 50, your spouse will need to earn at least $12,000 (to cover the $6,000 annual maximum for each of you). (The limits is up from $11,000 for the 2018 tax year.)
The limit also doesn’t apply to transfers from other retirement accounts, such as those used to create a rollover IRA. You should also note the deadline for IRA contributions for any given tax year is tax day — typically April 15 — of the following calendar year. That means, for example, that 2018 IRA contributions can be made all the way through April 15, 2019.