What Are the 2019 IRA Contribution Limits?

IRAs can help you save for retirement -- but how much are you allowed to contribute?

Christy Bieber
Christy Bieber
Jul 11, 2019 at 11:58AM
Investment Planning

If you want to invest for retirement outside of a workplace 401(k), an Individual Retirement Account is likely the best way to do it. An Individual Retirement Account, or IRA, is formally known as an Individual Retirement Arrangement by the IRS. It allows you to save for retirement while enjoying tax advantages.

You can open IRAs with banks, brokerage firms, credit unions, or other financial institutions. Next, you contribute money so you can enjoy your golden years without worrying about running out of money in retirement.

But you can't just contribute an unlimited amount of money to your IRA. In fact, there are annual contribution limits -- which can be affected by the type of IRA you open as well as by your current income. It's helpful to know the maximum cap on the amount you can contribute for each type of IRA so you can decide how to allocate your hard-earned cash when saving for the future.

Binder labeled "retirement savings plan" with calculator on top of it.

Image source: Getty Images.

What are the IRA contribution limits for 2019?

IRA contribution limits could be affected by the type of IRA you make an investment in, your income, whether you or your spouse have a workplace retirement plan, and the amount of money you earn. The contribution limits can also change from one year to the next.

This guide will explain in detail what the maximum IRA contribution limits are so you can figure out how much you can contribute. For a quick answer to the maximum you can contribute to an IRA, here are the contribution limits for different IRA types in 2019:

  • Traditional and Roth IRAs: The annual contribution limit for traditional and Roth IRAs is $6,000 total across both account types for those under the age of 50 and $7,000 for people 50 and over. Tax deductions for traditional IRA contributions begin to phase out at certain income levels if you or your spouse has a workplace retirement plan. You'll lose your deduction entirely once your income is too high, but you can still make nondeductible contributions. The amount you can contribute to a Roth IRA declines once your income hits a certain threshold, and you can't contribute at all once your income hits $137,000 if filing singly, $203,000 if married filing jointly, or $10,000 if married filing separately.
  • SEP IRAs: The annual contribution limit for a SEP IRA is 25% of up to $280,000 in compensation or 25% of net self-employment earnings (self-employment income minus SEP contributions and 1/2 of self-employment tax). Only employers can make contributions (you're counted as an employer if you run your own business). The total maximum annual contribution is $56,000.
  • SIMPLE IRAs: The annual contribution limit is $13,000 for a SIMPLE IRA or $16,000 if you're over 50. Employers can contribute 2% of compensation or can match contributions you make up to a maximum of 3% of compensation. You can open a SIMPLE IRA if you are self-employed or run your own business and can contribute as both employee and employer.

You can never contribute more than the taxable compensation you have each year. And if you contribute too much, you could be subject to penalties in the form of a 6% tax charged by the IRS on excess contributions that aren't withdrawn by the date your tax return is due.

Now that you know the basics, let's look more closely at how these contribution limits work so you can make informed choices about funding your IRA.

How do IRA contribution limits work?

There are four different types of IRAs available to invest in -- and the IRA contribution limits work differently for different kinds of accounts. These include the following account types:

  • Traditional IRA: This account provides up-front tax breaks in the year you make the contribution. If you contribute $1,000 in 2019, your taxable income is reduced by $1,000 (assuming you qualify for the deduction based on your income). If you or your spouse have a workplace retirement plan and your income reaches a certain threshold, your deduction for traditional IRA contributions starts to phase out -- and you lose the ability to make deductible contributions entirely when your income is too high. However, you can still make nondeductible contributions.
  • Roth IRA: With a Roth IRA, you contribute with after-tax money, but unlike with a traditional IRA, you don't get a tax deduction in the year you make a deposit. However, money grows tax-free in your Roth IRA and you can make withdrawals on investment earnings as a senior without paying taxes on money you take out (as long as you follow the rules, such as waiting until you're 59 1/2 or older to begin making withdrawals and waiting at least five years from your first contribution to make your first withdrawal). Once your income reaches a certain threshold, your ability to contribute to a Roth IRA begins to phase out. And if your income gets too high, you aren't allowed to contribute to a Roth IRA at all anymore.
  • SEP IRA: SEP stands for Simplified Employee Pension. If you run your own business or earn self-employment income as a sole proprietor, you could open and contribute to a SEP for yourself. You'd be acting as your employer for purposes of making contributions. If you work for a small company, your employer may also operate a SEP IRA and make contributions for you.
  • SIMPLE IRA: If you have self-employment income or run a business with fewer than 100 employees, you can open and contribute to this account. You may also have a SIMPLE IRA if you work for an employer and your employer opened this account for you. SIMPLE stands for Savings Incentive Match for Employees.

There is an aggregate IRA contribution limit for traditional and Roth IRAs. This means you can contribute to a traditional IRA, a Roth IRA, or both -- but you cannot exceed the combined annual limit for both types of accounts. Remember, for 2019, this is $6,000 if you're under 50 or $7,000 if you're 50 and over.

If your employer contributes to a SEP IRA for you, you also have the option to contribute to a traditional or a Roth IRA. The contributions your employer makes to a SEP plan don't affect the amount you can contribute on your own behalf to an IRA. The same is true for SIMPLE IRA contributions -- you can contribute to both a SIMPLE and a traditional or Roth IRA.

Both SIMPLE and SEP IRAs count as employer plans -- so if you or your spouse participate in one, you're subject to standard income limits on traditional IRA contributions.


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What are the 2019 contribution limits for a traditional and Roth IRA?

The 2019 combined contribution limit for traditional and Roth IRAs is $6,000 if you are under the age of 60. This is a $500 increase from the maximum $5,500 contribution limit in 2018.

If you are over the age of 50, you are eligible to make an additional $1,000 in catch-up contributions. So your combined contribution limit for traditional and Roth IRAs would be $7,000.

You can divide this $6,000 or $7,000 up any way you'd like. If you were 55 years old and had a $7,000 contribution limit, you could contribute the full $7,000 to your traditional IRA, could contribute the full $7,000 to your Roth IRA, or could split up your allowable contribution any way you want. For example, you could put $3,500 into a traditional IRA and $3,500 into a Roth -- or you could put $6,000 into a traditional IRA and $1,000 into a Roth.

If you're not sure whether to contribute to a traditional IRA, a Roth IRA, or both, read how to choose between a traditional and Roth IRA.

You can't contribute more to an IRA than you earn

Although the maximum contribution limit for traditional and Roth IRAs is a combined $6,000 or $7,000, you cannot contribute more than your taxable compensation earned during the year. This means if you only work part-time, earning $2,000 in income, the maximum you'd be allowed to contribute is $2,000.

Income from many different sources counts, including wages, salaries, sales commissions, professional fees, tips, bonuses, and self-employment income. However, income you don't earn through your labor generally isn't counted toward your taxable compensation, including rental income, income from annuities, pension income, deferred compensation, or profit from the sale of assets such as stocks. So if you earned $2,000 from working, $10,000 from a rental property, and $5,000 from an annuity, your maximum contribution would still only be $2,000.

There is one exception though: If you're married and only one spouse works, you can open a spousal IRA for the nonworking spouse. The working spouse could contribute to the spousal IRA of the stay-at-home spouse, up to maximum contribution limits. So if a wife worked and a husband (both under age 50) stayed home, the wife could contribute $6,000 to her IRA and $6,000 to her husband's IRA in 2019. This contribution to the husband's account would be allowed even if he didn't have any taxable compensation himself.

How does income affect the 2019 traditional IRA contribution limits?

If either you or your spouse has a workplace retirement plan and your income exceeds a certain threshold, the tax deduction for traditional IRA contributions begins to phase out. Once your income hits a certain level, you lose the ability to deduct contributions entirely. The tables below show the level at which your deduction begins to phase out and is lost entirely if you have a workplace plan.

Filing Status

If You Make Above This Income, Your Deduction Phases Out

If You Make Above This Income, You Lose Your Deduction

Single

$64,000

$74,000

Married filing jointly

$103,000

$123,000

Married filing separately

$0

$10,000

Table source: IRS.

And the table below shows the level at which your deduction phases out, or is lost entirely, if your spouse has a workplace retirement plan.

Filing Status

If You Make Above This Income, Your Deduction Phases Out

If You Make Above This Income, You Lose Your Deduction

Married filing jointly

$193,000

$203,000

Married filing separately

$0

$10,000

Table source: IRS.

How to calculate your traditional IRA contribution if your deduction is phasing out

If your income is above the income level at which your deduction begins to phase out but you don't make so much that you lose your deduction, you will have to calculate how much of an IRA contribution is tax deductible.

Here are the steps you'll need to take in 2019 to find the amount you can contribute:

  • Figure out your modified adjusted gross income (MAGI). Your MAGI is calculated by adding up income from all sources and then making certain adjustments, such as adding back in the amount of student loan interest or tuition and fees you deducted from your taxes and adding in savings bond interest and nontaxable foreign earned income. This guide to modified adjusted gross income provides more details on calculating your MAGI.
  • Subtract your MAGI from the amount at which you lose your deductions from the above tables. It's $74,000 if you're single and have a workplace plan, $123,000 if you file a joint return with your spouse and you have a workplace plan, $10,000 if married filing separately, or $203,000 if married filing jointly and your spouse has a workplace plan.
  • Multiply the resulting number by 27.5% if you are married filing jointly or a qualifying widower and you're covered by an employer plan. Multiply by 32.5% if you're 50 or over and you're married filing jointly or a qualifying widower and you are covered by an employer plan. Otherwise, multiply the resulting number by 55% if you're under 50 or by 65% if you're over the age of 50.
  • If this number isn't a multiple of 10, round to the next highest multiple of 10. This tells you the maximum you can deduct for IRA contributions based on your income.

Here's how this would work in practice if your MAGI is $67,000, you file as single, and you have a workplace retirement plan.

  • Your MAGI is $67,000
  • $74,000 - $67,000 = $7,000
  • $7,000 x 55% = $3,850

So you could take a maximum of $3,850 in deductions for IRA contributions in 2019. The IRS also provides helpful worksheets in Publication 590-A to walk you through this process. The worksheet you will need to use is Worksheet 1-2.

What if your income exceeds the threshold to deduct IRA contributions?

If your income is too high to take a deduction for IRA contribution limits, you can make nondeductible contributions. Although you do not get an up-front tax break, your money can still grow tax free in your IRA, and you will not owe taxes until you begin to make withdrawals as a senior.

You will have to track what portion of your contributions is deductible versus nondeductible, though, as the IRS gives you credit for already paying taxes on a portion of the money in your IRA when you begin making withdrawals. You can learn more about how nondeductible contributions work -- and what they mean for your taxes -- in this guide to how nondeductible IRA contributions impact tax liability.

How does income affect the 2019 Roth IRA contribution limits?

There are also income limits for making contributions to a Roth IRA. These income limits apply regardless of whether you or your spouse have access to a workplace retirement plan. And once your income hits the upper limit, you cannot make contributions at all -- there's not an option to make nondeductible contributions to a Roth IRA.

Filing Status

If You Make Above This Income, Your Eligibility Phases Out

If You Make Above This Income, You Can't Contribute to a Roth

Single

$122,000

$137,000

Married filing jointly

$193,000

$203,000

Married filing separately

$0

$10,000

Table source: IRS.

How to calculate your Roth IRA contribution limit if your deduction is phasing out

If your income is above the income level at which your deduction begins phasing out but not so much that you cannot contribute at all, here are the steps to determine how much you're allowed to contribute to a Roth IRA:

  • Calculate your modified adjusted gross income.
  • Subtract $193,000 if you file as married filing jointly or qualified widow; $0 if filing as married filing separately and you lived with your spouse during the year; or $122,000 for any other filing status.
  • Divide by $10,000 if married filing jointly, a qualifying widow, or married filing separately and you lived with your spouse. Or divide by $15,000 for other filing statuses.
  • Multiply this amount by the annual maximum combined contribution limit for Roth and traditional IRAs.
  • Subtract this number from the maximum contribution limit to find how much you can contribute.

For example, say your modified adjusted gross income is $200,000 and you are filing as married filing jointly. Here's how this calculation would look:

  • $200,000 - $193,000 = $7,000
  • $7,000/$10,000 = .7
  • The 2019 contribution limit is $6,000 if you're under 50, so multiply $6,000 x .7 = $4,200
  • The maximum contribution limit is $6,000 if under 50, so subtract $4,200 from $6,000 ($6,000 - $4,200).

You can contribute $1,800.

What if your income exceeds the threshold for Roth IRA contributions?

If your income exceeds the threshold to contribute to a Roth IRA, you cannot contribute to one. However, there is a way to get money into a Roth IRA using a backdoor approach. You can put money into a nondeductible IRA and then convert this to a Roth IRA. If you have other money invested in a traditional IRA, this can get complicated -- but you can read more here about backdoor Roth IRAs if you want to try to invest in a Roth despite your income exceeding the permissible limits.

What are the 2019 contribution limits for a SEP IRA?

Only employers can contribute to a SEP IRA. If you only earn wage income from an employer that doesn't offer a SEP, you can't contribute anything to this type of IRA.

If your employer offers a SEP IRA, your employer can contribute up to 25% of your compensation up to a maximum of $280,000. The maximum annual contribution your employer can make on your behalf is $56,000 for 2019.

If you are self-employed, you can contribute to a SEP for yourself while acting as an employer. You can contribute a maximum of 25% of net earnings from self-employment -- but you have to calculate 25% of net earnings by subtracting SEP contributions and half of self-employment taxes. This effectively ends up capping your contributions at slightly below 20% of gross income.

What are the 2019 contribution limits for a SIMPLE IRA?

If your employer offers a SIMPLE IRA, you can contribute up to $13,000 if you're under age 50 or up to $16,000 if you're 50 or older. Your employer must offer matching contributions and can either directly match contributions you make up to 3% of your compensation or can contribute a fixed amount to your SIMPLE IRA that equals 2% of your compensation.

If you are self-employed, you can contribute both for yourself as an employee and as your employer and make a contribution. So if you were self-employed and wanted to max out your personal contributions, you could contribute $13,000 (assuming you were under 50) and you could match your contributions up to 3% of your salary. If you made $80,000, this would mean you could contribute another $2,400 acting as your employer (3% of $80,000). Of course, if you contributed less than $2,400 and your employer was matching contributions for you, your employer would only contribute as much as you actually put into the account.

What if you contribute too much money to an IRA?

If you make excess contributions to an IRA -- which means you contribute more than the maximum allowed -- you need to withdraw the funds by the date on which your tax return is due (including extensions). You will also need to withdraw any earnings on investments that could be attributed to your excess contribution. Typically, your brokerage calculates this amount for you.

If you do not withdraw the funds, you will owe a 6% tax on excess amounts remaining in your IRA at the end of the year. However, the maximum tax owed can't exceed 6% of the combined value of all your IRAs when the tax year ends.

Start saving in an IRA

Now you know the 2019 IRA contribution limits. If you can, it's best to max out your contributions so you save as much as possible for retirement. Scoring tax breaks for retirement savings can make building a big nest egg easier, and you'll need this cash to help support you during your golden years. If you're not sure which retirement account is the best one for you to open and contribute to, check out our guide on deciding between a Roth or Traditional IRA or our detailed guide to retirement planning.