An individual Retirement account (IRA) provides certain tax advantages. Anyone who wants to save for retirement can set one up. Traditional IRA contributions are tax deductible for the year when you make the contribution, and withdrawals in retirement are taxed at ordinary income rate. Roth IRAs provide no tax break for contributions, but earnings and withdrawals are generally tax-free.
Limit for contributions to an Individual Retirement
You can contribute to a traditional IRA or Roth IRA or both. Your total contributions to either traditional or Roth IRAs for the year cannot excess the lesser of your earned income or the annual maximum amount for the year.
| IRA Contribution Limit | ||
| 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 |
The earned income requirement for IRAs
To be eligible to make contributions to an IRA for a particular year, you must have earned income. The earned income consists of wages, net income from self-employment and alimony.
The age requirement for the traditional IRAs
You must be under age 70.5 years old by the end of year to make contribution to a traditional IRA. By contrast, Roth IRAs have no age restrictions.
Roth IRA contribution limits
Roth IRA contribution limits are based on your modified adjusted gross income (MAGI) and your filing status. Partial contributions are allowed for certain income ranges.
| 2016 Roth IRA Contribution Limit | ||
| Filing status | Modified adjusted gross income (MAGI) | Contribution limit |
| Single | <$117,000 | Statutory limit |
| $117,000-132,000 | reduced | |
| >$132,000 | no contribution | |
| Married filing jointly | <$184,000 | Statutory limit |
| $184,000-194,000 | reduced | |
| >$194,000 | no contribution | |
| Married filing separately | <$10,000 | reduced |
| >$10,000 | no contribution | |
Phaseout for the traditional IRA deduction
You can make contributions to your traditional IRA regardless your income. But you are covered by a retirement plan at work and your modified adjusted gross income is above a certain level, your contributions will be phased out, even entirely nondeductible in some cases.
Deadlines for making contributions
You can make contribution to your IRAs at any time during the tax year, and you can make contributions after the tax year but before the due date of your tax return without any extensions.
IRA Contribution and Deduction Calculator
You can make contributions to your traditional IRA regardless your income. But you are covered by a retirement plan at work and your modified adjusted gross income is above a certain level, your contributions will be phased out, even entirely nondeductible in some cases. You can use our IRA calculator in planning your contributions to your IRAs.
