What Is the Maximum IRA Contribution for 2018?

Although the IRS has decided to keep contribution limits the same for retirement accounts this year as it was last year, they did raise eligible income levels for Roth IRAs to adjust for inflation and may even help more savers utilize Roth accounts. Here is a quick refresher on contribution limits and income restrictions:

IRA Contribution Limits

For both Traditional and Roth IRAs, savers may contribute up to $5,500, or $6,500 for people 50-years-old or older. Keep in mind, this is the total amount per person. If you have multiple IRAs, you are only allowed to contribute the $5,500 ($6,500) total between all of your accounts. The only exception to this is if you have a Spousal IRA, which allows the primary income-earner to contribute another $5,500 to an IRA of their non-working spouse. Read more about Spousal IRAs here. With the new age of cryptocurrency, you also need to freshen yourself up on the invest opportunities such as Bitcoin in Roth IRA.

Another caveat to retirement accounts is that you may only contribute the maximum amount as long as your income is at or above $5,500 per year. Otherwise, you can only contribute up to what your annual income is. For example, if you make $3,500 this year, you can only contribute $3,500 to a retirement account. Income counts as anything earned from salary, hourly pay, or profits from a small business. Passive income, such as earnings on an investment, do not count as eligible income.

Income Restrictions for Roth IRA Contributions

Since Roth IRAs allow you to pull out money tax-free, the government has issued income restrictions for who is allowed to contribute to these accounts. Here is a breakdown of these limits:

Married Filing Jointly: You may contribute the maximum amount if your combined annual income is less than $189,000. Your contribution limit will start to phase out between $189,000 and $198,999. Couples who earn more than $199,000 are ineligible to contribute to a Roth.

Married Filing Separately: If you are filing separately, but are still legally married, then you may only contribute the maximum amount if you earn $0. Between $1 and $9,999, your contribution levels will start to phase out. People earning more than $10,000 in this category are ineligible to contribute to a Roth IRA.

Single: Single earners may contribute the full amount if they earn less than $120,000. The contribution limits will start to phase out between $120,000 and $134,999. Single earners may not contribute to a Roth IRA if they earn $135,000 or more.

Income Restrictions for a Traditional IRA Tax Write-Off

Income restrictions for the savers tax credit was also slightly raised this year. Here are the new income limitations for receiving a tax break for Traditional IRA contributions:

Married: Married couples can earn up to $63,000 to receive a full tax credit for their IRA contributions.

Heads of Household: The income limit for this category is $47,250.

Single: Single filers may earn up to $31,500 and receive a full tax credit for their IRA contributions.

If you happen to earn more than your category’s limit, you can still contribute to a Traditional IRA. However, your contributions won’t count for a tax credit.

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