What we'll cover
Roth and traditional IRA contribution limits
Income limits for IRAs
Tax deduction information
When you first start saving for retirement, you might feel intimidated by all the choices available. Wrapping your head around such a massive goal can also seem intimidating. Take heart: Consistency is most important.
One of the initial steps is deciding where to keep your retirement funds and learning about the rules and limits of that account. Individual Retirement Accounts (IRAs) offer both traditional and Roth account types. Each has specific contribution limits, income limits and tax rules (more on that below).
Even if you have an employer-sponsored retirement account, a supplemental retirement account like an IRA could bring you more flexibility and increase your saving power. Let’s walk through IRA contribution limits for both Roth and traditional IRAs.
Roth IRA vs. traditional IRA
Your money grows tax-deferred with a traditional IRA, which means you pay taxes on it when you withdraw money during retirement. You contribute after-tax earned income with a Roth IRA, which means it grows tax free.
Let’s work through the contribution limits and income limits for 2023.
Roth IRA vs. traditional IRA contribution limits
Stay on top of your current IRA contribution, income and age limits, so you can take full advantage of your IRA without being penalized for contributing too much. IRA contribution limits for 2023 include the following:
| Roth IRA | Traditional IRA |
|---|---|---|
Contribution limits | $6,500 age 49 and younger; $7,500 age 50 or older | Same as Roth IRA |
Income phase-out ranges | $138,000 to $153,000 for single taxpayers and heads of household $218,000 to $228,000 for those married, filing jointly $0 to $10,000 for those married, filing separately | $73,000 to $83,000 for single taxpayers covered by a workplace retirement plan $116,000 to $136,000 for married couples filing jointly. This applies when the spouse making the IRA contribution is covered by a workplace retirement plan $218,000 to $228,000 for taxpayers not covered by a workplace retirement plan, married to someone who's covered $0 to $10,000 for those married filing a separate return — applies to taxpayers covered by a workplace retirement plan |
Age limits | Contribute at any age but can contribute an extra $1,000 if age 50 and older | Same as Roth IRA |
Income limits for Roth IRA vs. traditional IRA
Now that we’ve talked about some of the traditional and Roth IRA contribution limits, let’s dive into specific income limits.
With a traditional IRA, income limits determine whether you can deduct your traditional IRA contributions. In other words, if you or your spouse have a retirement plan through an employer, your ability to deduct might change.If you have a Roth IRA, your contribution will not be deductible — but income limits do determine your maximum annual contribution.
The charts below will help you figure out where you stand. You’ll need two pieces of information: your filing status and your modified adjusted gross income (which you can figure out using the instructions provided in IRS Publication 590-A).
Roth IRA income limits for 2023 contributions
Stay on top of current IRA contributions, income and age limits, so you can take full advantage of your IRA without being penalized for contributing too much. The most common IRA contribution guidelines — based on adjusted gross income (AGI) — for 2023 include:
Filing status | 2023 modified AGI | Maximum contribution |
|---|---|---|
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) | Less than $138,000 | Up to the limit |
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) | More than $138,000 but less than $153,000 | Reduced amount |
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) | More than $153,000 | $0 |
Married filing separately and you lived with your spouse at any time during the year | Less than $10,000 | Reduced amount |
Married filing separately and you lived with your spouse at any time during the year | More than $10,000 | $0 |
Married filing jointly or qualifying widow(er) | Less than $218,000 | Up to the limit |
Married filing jointly or qualifying widow(er) | More than $218,000 but less than $228,000 | Reduced amount |
Married filing jointly or qualifying widow(er) | More than $228,000 | $0 |
Traditional IRA income limits for 2023 deductions
Keep in mind that the income limits below are only applicable to you if you are covered by a retirement plan at work in addition to your IRA. This is based on modified adjusted gross income (MAGI), your adjusted gross income (AGI) after taking into account certain allowable deductions and tax penalties.
Filing status | 2023 modified AGI | Deduction |
|---|---|---|
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) | $73,000 or less | Full deduction |
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) | Between $73,000 and $83,000 | Reduced deduction |
Single, head of house or married filing separately (and you did not live with your spouse at any time during the year) | More than $83,000 | No deduction |
Married filing jointly or qualifying widow(er) | $116,000 or less | Full deduction |
Married filing jointly or qualifying widow(er) | Between $116,000 and $136,000 | Reduced deduction |
Married filing jointly or qualifying widow(er) | More than $136,000 | No deduction |
Contribution limits for multiple IRAs
If you have more than one IRA, no worries. You’re allowed to contribute to more than one IRA in the same year, but the total amount can’t exceed the annual limit set by the IRS. Contributions must be made before April 15 of the following year (generally corresponding to the federal tax deadline).
What if I reach my IRA contribution limit?
Once you have your head wrapped around IRA contribution, income and age limits, keep in mind that reaching your annual IRA contribution limit doesn’t mean you have to stop socking money away for retirement.
In addition to an IRA or 401(k), if you have access to one through your employer, you can always allocate a savings or investment account to your retirement and keep up with your consistent savings even after reaching the IRA contribution limit. Spreading your retirement funds across different types of accounts could help you manage your taxes as well, since different types of accounts will be taxed differently. It’s best to consult with a tax professional when working through those details.
Knowing the limits of any account is important as you work on your saving strategy. With these IRA limits in hand, you’re one step closer to being well-prepared for retirement. Whether you choose a traditional or Roth IRA, opening a tax-advantaged retirement account is a smart step to getting serious about saving for those golden years.
