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Retirement

IRA Contribution Limits for 2022 & 2023

The contribution limits for a traditional IRA and Roth IRA are $6,000 for 2022 and $6,500 for 2023. If you’re over the age of 50, you also get an additional $1,000 in catch-up contributions, bringing your total limits to $7,000 for 2022 and $7,500 for 2023.

  • Contribution limits may be lowered or restricted for the Roth IRA if your modified adjusted gross income (MAGI) is too high.
  • The traditional IRA has no income limits, but your tax deductions could get reduced to zero if your MAGI is too high.

What is the contribution limit for an IRA?

The IRA contribution limit is $6,000 ($7,000 if age 50+) for 2022 and $6,500 ($7,500 if age 50+) for 2023.

2022 IRA contribution limits

  • $6,000 if under 50 years old.
  • $7,000 if 50 years of age or older.

2023 IRA contribution limits

  • $6,500 if under 50 years old.
  • $7,500 if 50 years of age or older.

Contribution limits are the same for both the traditional IRA and the Roth IRA. You’re also allowed to contribute to both a traditional and Roth IRA at the same time. However, your total contributions to both accounts must not exceed the yearly contribution limits.

For example, if you're under 50 years old in 2022, your IRA contribution limit is $6,000. If you contribute $5,000 to a Roth IRA, you could only contribute $1,000 to a traditional IRA.

You can only contribute as much as your taxable income

Another thing to keep in mind is that your contributions must not exceed your taxable income for the year. For example, if you only made $2,000 in taxable income this year, you can only contribute up to a maximum of $2,000.

How do contributions work?

Contributions to a traditional IRA get different tax benefits from contributions made to a Roth IRA.

  • Contributions to a traditional IRA are tax-deductible. You deposit money into your account with pre-tax dollars that you haven't paid any taxes on. Withdrawals in retirement are taxed as regular income.
  • Contributions to a Roth IRA are made with money you've already paid income taxes on. You don't get any immediate tax advantages, but withdrawals in retirement are tax-free.

For example, if you made $50,000 in taxable income this year and decide to contribute $5,000 to a traditional or Roth IRA:

  • Contributing to a traditional IRA would mean the $5,000 gets deducted from your income. Your new taxable income is now $45,000.
  • Contributing to a Roth IRA would mean that your taxable income is still $50,000. You contribute money after paying taxes on the full amount.

Who can contribute to an IRA?

Anyone who earns taxable income can contribute to a traditional or Roth IRA. There are no age limits and even minors can start contributing at an early age.

However, a Roth IRA has income limits based on modified adjusted gross income (MAGI) and a traditional IRA has tax deduction limits based on MAGI.

What is modified adjusted gross income (MAGI)? MAGI is adjusted gross income with some deductions and exclusions added back in. You can view IRS Publication 590-A Worksheet 1-1 for calculating MAGI for a traditional IRA and Worksheet 2-1 for a Roth IRA.

A Roth IRA has income limits. If you make too much money, you cannot contribute.

Roth IRA income limits for 2022

  • If your MAGI is $129,000 or less, you can contribute up to the maximum Roth IRA contribution limit of $6,000 ($7,000 if age 50+).
  • If your MAGI is over $129,000 but less than $144,000, your contribution limit gets reduced.
  • If your MAGI is over $144,000, you cannot contribute at all.

To be able to make the full contribution into a Roth IRA for 2022, your income must be under $129,000.

Roth IRA income limits for 2023

  • If your MAGI is $138,000 or less, you can contribute up to the maximum Roth IRA contribution limit of $6,500 ($7,500 if age 50+).
  • If your MAGI is over $138,000 but less than $153,000, your contribution limit gets reduced.
  • If your MAGI is over $153,000, you cannot contribute at all.

To be able to make the full contribution into a Roth IRA for 2023, your income must be under $138,000.

Also read: Roth IRA Withdrawal Rules

A traditional IRA has no income limits, but tax deductions could get reduced

Unlike a Roth IRA, there are no income limits with a traditional IRA. However, tax deductions could get reduced to zero if you also receive a 401k or other retirement plan at work.

Traditional IRA tax deduction limits for 2022

  • If your MAGI is $68,000 or less, you get get a tax deduction up to the maximum traditional IRA contribution limit of $6,000 ($7,000 if age 50+).
  • If your MAGI is over $68,000 but less than $78,000, you'll get a partial tax deduction.
  • If your MAGI is over $78,000, you get no tax deduction.

To be able to get the full tax-deduction on your contributions for 2022, your income must be under $68,000.

Traditional IRA tax deduction limits for 2023

  • If your MAGI is $73,000 or less, you get get a tax deduction up to the maximum traditional IRA contribution limit of $6,500 ($7,500 if age 50+).
  • If your MAGI is over $73,000 but less than $83,000, you'll get a partial tax deduction.
  • If your MAGI is over $83,000, you get no tax deduction.

To be able to get the full tax-deduction on your contributions for 2023, your income must be under $73,000.

You're still allowed to make contributions into a traditional IRA even if your income is too high but you get no tax deductions.

Contribution limits are different from rollovers

Contribution limits only apply to contributions. There are no limits on rollovers from other retirement accounts, and any rollovers don't affect your contribution limits. For example, if you have $100,000 in your 401k and want to roll it over into your IRA, you could rollover the entire amount and still have the full IRA contribution room left over.

The most common type of IRA rollover is the mega backdoor Roth IRA. For people who don't qualify for Roth IRA contributions because income is too high, you could contribute to an after-tax 401k account or after-tax solo 401k account and rollover the entire amount into a Roth IRA.

An IRA has lower contribution limits compared to other retirement accounts, like a SEP IRA or solo 401k. If you qualify for a solo 401k (you only need any self-employment activity with no full-time employees), you can contribute over 10x more per year.

Also read: Roth IRA vs Traditional IRA

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