The easy answer is that the limit for IRA contributions set by the IRS is $5,500 for the 2017 tax year, with an additional $1,000 catch-up contribution allowed if you're over 50. However, there's a little more to the story. Specifically, your ability to contribute might be limited, and you don't need to contribute the entire amount during 2017.

A change jar labeled "Retirement"

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The 2017 IRA contribution limits

Inflation has been relatively low in recent years, so it shouldn't be a big surprise that the IRA contribution limits have not changed since the 2013 tax year. 2017 will be the fifth consecutive year where IRA contributions are capped at $5,500, with an additional $1,000 catch-up contribution allowance for savers age 50 and above.

Year

IRA Contribution Limit

Catch-Up Contribution Limit

2017

$5,500

$1,000

2016

$5,500

$1,000

2015

$5,500

$1,000

2014

$5,500

$1,000

2013

$5,500

$1,000

2012

$5,000

$1,000

Data source: Internal Revenue Service.

It's important to note that these are per-person limits, not per account. In other words, if you're under 50 and have more than one IRA, your total contribution to all of your IRA accounts cannot exceed $5,500 for 2017.

You can make your IRA contribution for 2017 as a lump sum, or you can contribute a little at a time. One suggestion is to make equal monthly contributions, or have your IRA contributions automatically debited from your bank account to coincide with your paychecks. For example, if you're under 50 and get paid every two weeks, an IRA contribution of $211.54 per paycheck would translate to $5,500 for the year. If you get paid at a different frequency, simply divide $5,500 (or $6,500) by the number of paychecks you'll get in 2017.

Roth IRAs are restricted by income

There are two basic types of IRA: traditional and Roth. You can read a full discussion of how to choose the best IRA for you here, but for now, the important difference are the tax implications of each account type.

Traditional IRAs are "tax-deferred," meaning that contributions can be tax deductible, but eventual withdrawals are included in taxable income. Roth IRAs are an "after-tax" retirement account, meaning that your contributions are not tax deductible. However, qualified withdrawals from a Roth account do not count toward your taxable income. In other words, they are 100% tax-free.

In addition to the tax benefits, there are some other compelling reasons to choose a Roth IRA. For example, Roth contributions may be withdrawn penalty-free at anytime, and there is no required minimum distribution rule like with other retirement accounts.

The downside is that the ability to contribute directly to a Roth IRA is subject to income limitations. Here they are for 2017, broken down by tax filing status:

Tax Filing Status

AGI Limit for Full Contribution

Partial Contribution Allowed

No Contribution

Single/head of household

$118,000

$118,000-$132,999

$133,000 or more

Married filing jointly

$186,000

$186,000-$195,999

$196,000 or more

Married filing separately

$0

$0-$9,999

$10,000 or more

Data source: IRS. All figures are adjusted gross income (AGI).

It's also worth noting that if you can't directly contribute to a Roth IRA, you can still contribute to a traditional IRA and convert your IRA to a Roth. This is known as the "backdoor" Roth contribution method.

Everyone can contribute to a traditional IRA, but...

Unlike a Roth IRA, everyone can contribute to a traditional IRA, regardless of income. However, not everyone qualifies for the tax deduction, which is the biggest incentive to contribute to a traditional IRA in the first place.

The good news is that if you're not eligible to participate in a retirement plan at work, your ability to take a traditional IRA deduction is not limited unless your spouse is covered by an employer's plan. In this case, if your combined AGI is less than $186,000, you can take a full IRA deduction. If you earn more than this, but less than $196,000, you are eligible for a partial deduction.

On the other hand, if you are eligible for a retirement plan at work, your ability to take a traditional IRA deduction is limited to significantly lower income levels.

Tax Filing Status

Deduction Phase-Out Range

Single/head of household

$62,000-$72,000

Married filing jointly

$99,000-$119,000

Married filing separately

$0-$10,000

Data source: IRS.

You have more than 15 months to contribute

Finally, a nice feature of the IRS's laws regarding IRA contributions is the extended time window to make contributions. You can make contributions for a given tax year anytime before that year's regular tax deadline in April.

For example, the deadline to file a 2016 tax return is April 18, 2017, so you can make IRA contributions for the 2016 tax year until that date. The point is that while the $5,500 contribution limit is an "annual" maximum, you actually have about 15 and a half months to make your contributions for any given year. So, even if you're reading this in early 2017, you can still take advantage of the tax benefits of IRA investing for both the 2016 and 2017 tax years.

Retirement planning can seem complicated and scary, but with the right plan and a long-term approach, it's something anyone should be able to tackle. It's also one of the most important things.

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