Traditional IRA contribution limits for 2015 are $5,500 for those under age 50 and $6,500 for those aged 50 and over. We explain additional limits and restrictions below.
- Traditional IRA Contribution Limits
- Roth IRA Contribution Limits
- SIMPLE IRA Contribution Limits
- SEP IRA Contribution Limits
- Traditional 401k Contribution Limits
- Roth 401k Contribution Limits
- One-Participant 401k Contribution Limits
- Coverdell ESA Contribution Limits
- HSA Contribution Limits
The difference between traditional IRAs and Roth IRAs is that traditional IRA contributions are tax deductible, while Roth IRA contributions aren’t. However, retirement age withdrawals from traditional IRAs aren’t tax deductible, while withdrawals from Roth IRAs are. Roth IRAs are generally seen as the smarter move, since they tax the money before it’s been invested and while it’s smaller, resulting in a lower overall tax bill.
All IRAs have limits on the amounts that can be contributed annually. They also have separate limits on the amount of each contribution that can be deducted from taxes. We detail all the limits and restrictions on IRA contributions below.
Traditional IRA Contribution Limits
- Traditional IRA contribution limit for 2015 under age 50: $5,500
- Traditional IRA contribution limit for 2015 age 50 or older: $6,500
- Traditional IRA contribution limit for 2014 under age 50: $5,500
- Traditional IRA contribution limit for 2014 age 50 or older: $6,500
Note that traditional IRA contribution limits haven’t changed from 2014 to 2015. Also note that those age 50 and over are allowed to contribute an additional $1,000 per year to traditional IRAs. That’s because the IRS allows those people closer to retirement age to make “catch up” contributions that let them beef up their retirement. Taxpayers age 50 or over don’t need to have fallen behind in their retirement savings in order to make catch up contributions.
Other Traditional IRA Contribution Limits
IRA contributions are further limited to the amount of taxable income for the year. For example, someone who has an adjusted gross income of $3,000 can only contribute $3,000 to their traditional IRA in that year.
That being said, someone who has no taxable income for the year can still contribute to a traditional IRA if their spouse had taxable income. IRA contribution limits in this case are based on the adjusted gross income on the couple’s joint return.
Once a taxpayer reaches a certain annual income level, additional IRA contribution limits come into play for Roth IRAs. However, there are no additional limits on IRA contributions for traditional IRAs based on income.
IRA Deduction Limits for Those With 401k Plans
Taxpayers with retirement plans through an employer like 401k plans can contribute up to the regular limit, but they face additional limits on the amounts they can deduct from their taxes. The table below explains
Basically, individuals earning less than $61,000 follow the standard rules for IRA contribution limits. Individuals making over $71,000 in adjusted gross income (AGI) can’t deduct any of their contributions but can still contribute up to the limit. Individuals who make between $61,000 and $71,000 can deduct part of their contribution.
Married couples filing jointly face similar deduction limits on their IRA contributions. Couples who are married filing jointly with a combined AGI of $98,000 follow standard IRA contribution limits. Married couples filing jointly with a combined AGI over $118,000 can contribute to the limit but can’t deduct any of their contribution. And those in between can only deduct part of what they contribute.
Married couples who file separately face much tighter limits: those making over $10,000 a year can’t deduct anything they contribute to an IRA. Most married couples who contribute to IRAs therefore file jointly.
Those with AGIs in the “phaseout” ranges between $61,000 and $71,000 and between $98,000 and $118,000 can figure the amount of their IRA deductions by looking at the IRA deduction worksheet in the instructions for form 1040.
Those over age 70 1/2 can’t contribute to traditional IRAs. There is no age limit on contributions to Roth IRAs.
Excess IRA contributions are taxed by the IRS at a rate of 6% per year.
IRA contributions for any year must be made by April 15th of the following year. For example a taxpayer who wants to contribute to an IRA in 2015 has until April 15th of 2016 to make the contribution.
For comparison, check out our article on Traditional 401k Contribution Limits.