Traditional IRAs are tax-advantaged retirement savings accounts. Money invested in a traditional IRA can grow tax-free until you begin making withdrawals as a retiree. Withdrawals are taxed at your ordinary income tax rate.

Many, but not all, Americans can invest in a traditional IRA with pre-tax funds, claiming a deduction for their contribution in the year it is made. However, if either you or your spouse is covered by a workplace retirement plan, there are income limits for making tax-deductible contributions to traditional IRAs. If you exceed the income limits, you will not be eligible to contribute to your account with pre-tax funds, but you can still make nondeductible contributions and benefit from tax-free growth. 

Here's what you need to know about traditional IRA income limits in 2020.

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Is there a traditional IRA income limit?

No, there is no maximum traditional IRA income limit. Anyone can contribute to a traditional IRA. While a Roth IRA has a strict income limit and those with earnings above it cannot contribute at all, no such rule applies to a traditional IRA.

This doesn't mean your income doesn't matter at all, though. While you can make nondeductible contributions to a traditional IRA no matter how much money you earn, you are subject to an income limit for deductible contributions if either you or your spouse has access to a workplace retirement plan. These limits vary depending on which of you has a retirement plan at work. 

Income limits for other types of IRAs

A Roth IRA is the only IRA that has a strict income limit for eligibility to make any contributions. While there are backdoor ways to get your money into a Roth IRA, such as by contributing to a traditional IRA and doing a Roth conversion, you can't put money directly into a Roth if your income exceeds the annual cap. 

Traditional IRAs don't have this rule, nor do other types of IRAs, such as SEP and SIMPLE IRAs, which are commonly used by self-employed individuals and small business owners. You can contribute to a SIMPLE or SEP IRA no matter how high your income is, provided you meet the eligibility requirements for these account types. 

IRA tax deduction limit

Although there is no overall limit for contributing to a traditional IRA, there are income limits on tax-deductible contributions.

In other words, if you want to claim a tax deduction equaling the amount of your contribution in the year you invest the funds in your traditional IRA, your income must be below a certain threshold. The table below shows the limit for making tax-deductible IRA contributions in 2020 if you are covered by a workplace retirement plan such as a 401(k).

If Your Tax Filing Status Is:

Your Deduction Begins to Phase Out with an Adjusted Gross Income Of:

And You Cannot Make Deductible Contributions at All Once Your Income Exceeds:

Single or head of household

$65,000

$75,000

Married filing jointly

$104,000

$124,000

Married filing separately

$0

$10,000

Data source: IRS.

If your spouse is covered by a plan at work, there is also a limit on the amount of tax-deductible contributions you're eligible to make to your traditional IRA each year. The table below shows the income limits when your spouse is covered by a retirement plan at work. 

If Your Tax Filing Status Is:

Your Deduction Begins to Phase Out with an Adjusted Gross Income Of:

And You Cannot Make Deductible Contributions at All Once Your Income Exceeds:

Married filing jointly

$196,000

$206,000

Married filing separately

$0

$10,000

Data source: IRS.

Can I contribute to an IRA if I'm over the IRA income limit?

If your income exceeds these limits, you are still allowed to contribute money to a traditional IRA. However, the contribution that you make will not be tax deductible.

You may still wish to make a nondeductible contribution, either because you would prefer to allow your investments to grow tax-free and defer taxes on gains or because you want to make a backdoor Roth IRA contribution by contributing to your traditional IRA and then converting it to a Roth account. 

Remember, you are also not subject to income limits when you make contributions to either a SIMPLE IRA or a SEP IRA. However, you can generally participate in these accounts only if your employer offers them, if you own a small business, or if you are self-employed and you can open one for yourself. 

The ability to make nondeductible contributions to a traditional IRA regardless of how much you earn makes these a valuable type of retirement savings account for high earners who are interested in taking advantage of the benefits a Roth provides or who would simply prefer to wait and pay taxes on investment gains until retirement, rather than owing the IRS as investments are sold throughout the years. 

It is, however, important to note that there's not just an income limit for IRA contributions but also an annual contribution limit, too. You cannot contribute more than the allowable amount, or you could be hit with excess contribution penalties of 6% that apply for each year the extra funds are in your retirement plan. You don't want to lose your hard-earned money, so be sure you know the IRA contribution rules before putting money into your account.