IRA Contribution Limits

The IRA contribution limit is updated each year, in $500 increments based on inflation ($0 / No change, +$500, +$1,000.)

How much can I contribute to an IRA?

The IRA contribution limit for 2021 is $6,000. Individuals age 50 and over may also make an additional catch up contribution of $1,000. The contribution limits are the same as in 2019 and 2020 (no change.)

For a married couple filing taxes jointly, each spouse may contribute the annual limit independently. It doesn’t matter which spouse earned the income.

Only earned income can be contributed to an IRA. Total contributions cannot exceed the total earned income.

Are IRA contributions deductible?

There are 2 types of IRAs, Roth and Traditional. Contributions to Roth IRAs are made with after-tax money, are not deductible, and earnings grow tax-free. Contributions to Traditional IRAs are made with pre-tax money, have the potential to be deductible, and earnings are taxed upon withdrawal.

We can contribute to either or both types in any given year, but the combined contribution amount cannot exceed the lesser of the annual limit and total earned income.

For Traditional IRAs, if you are NOT covered by a retirement plan at work, such as a 401(k), 403(b), 457, or TSP, and your spouse (if applicable) is also not covered, then contributions are fully deductible at all income levels.

Things get more complicated if you (or your spouse) are covered by a retirement plan at work, or if tax filing status is anything other than single, head of household, or married filing jointly. (See IRS tables for income limits and phase-out.)

For Roth IRAs, contributions are reduced/restricted above certain income levels. A backdoor Roth becomes an option at that point (a non-deductible Traditional IRA contribution followed by a Traditional to Roth conversion.)

Historical IRA contribution limits