Table of Contents
- Understanding the Traditional IRA and Roth IRA
- 2022 Traditional and Roth IRA Contribution Limits
- Traditional IRA Roth IRA Income Limits
- Traditional IRA Income Limits & Deduction Phase-Outs
- Roth IRA Income Limits
- Did You Contribute Too Much to Your IRA?
- IRA Contribution Deadlines
- More information about IRAs
Individual Retirement Arrangements, or IRAs, are one of the best ways to invest for your retirement. They come in two flavors, Roth IRAs and traditional IRAs. While they are similar in some respects, there are two major differences that have a very powerful impact: how IRA contributions are taxed and income eligibility limits.
In 2022, you can contribute up to $6,000 to a traditional IRA or Roth IRA. There is also a $1,000 catch-up Contribution for those ages 50 and older, allowing you to contribute up to $7,000.
Let’s take a deeper dive and compare traditional and Roth IRAs, the contribution limits and income eligibility.
Understanding the Traditional IRA and Roth IRA
There are two main types of IRA accounts available to most people – they are the traditional and Roth IRA.
The short and quick explanation is that you make traditional IRA contributions with pre-tax money. The investments grow tax-free and you pay taxes on the money when you withdraw it.
You make Roth IRA contributions with money that you have already paid taxes on. It grows without the drag of taxes and you can withdraw it without any additional taxation.
Both traditional and Roth IRAs are subject to certain income limits and other rules regarding deductions and eligibility.
2022 Traditional and Roth IRA Contribution Limits
If you are younger than 50 years old, $6000 is the maximum amount you can invest in a traditional or Roth IRA. If you are 50 or older, you are eligible for a catch-up contribution of $1,000 and can contribute up to $7,000.
It is important to note that you can only contribute up to the maximum limit across all individual IRA accounts (self-employed retirement plans may have different rules).
For example, you could contribute $3,000 to a traditional IRA and $3,000 to Roth IRA – or any combination, so long as the total does not exceed $6,000.
The following chart shows IRA contribution limits for the last 20 years.
|Tax Year||Contribution Limit |
Age 49 or Younger
|Catch-Up Contribution |
Limit Age 50 or Older
Age 50 or Older
|2019 - 2022||$6,000||$1,000||$7,000|
|2013 - 2018||$5,500||$1,000||$6,500|
|2008 - 2012||$5,000||$1,000||$6,000|
|2006 - 2007||$4,000||$1,000||$5,000|
|2002 - 2004||$3,000||$500||$3,500|
Traditional IRA Roth IRA Income Limits
Your ability to make a tax-deductible traditional IRA contribution and Roth IRA qualifications are based on your modified adjusted gross income (MAGI), which is calculated on your tax form.
The following numbers are for the 2022 tax year.
Traditional IRA Income Limits & Deduction Phase-Outs
The traditional IRA phase-out schedule determines whether or not you can deduct your contributions against your taxes. The phase-out for traditional IRA deductions for single filers begins at $68,000 and ends at $78,000. The range for married filing jointly is between $109,000 and $129,000.
If your income is below these levels, you can deduct the full amount of your IRA contributions when you file your taxes. If you earn more than the threshold, you can not deduct your IRA contributions when you file your taxes.
It is important to note tax filers with income limits above the deduction levels can still contribute to a traditional IRA. However, they will not be able to deduct it against their taxes.
Contributing to a nondeductible traditional IRA can still be a good investment for some people, particularly those who are high-income earners who are not eligible to contribute to a Roth IRA. This enables investors to open a nondeductible IRA for the purpose of doing a Back-Door Roth IRA.
The following table shows income levels for deductible traditional IRAs.
|Filing Status||Modified AGI||Deduction|
|Single or head of household||$68,000 or less||Full deduction up to the amount of your contribution limit|
|More than $68,000 but less than $78,000||Partial deduction|
|$78,000 or more||No deduction.|
|Married filing jointly or qualifying widow(er)||$109,000 or less||Full deduction up to the amount of your contribution limit|
|More than $109,000 but less than $129,000||Partial deduction|
|$129,000 or more||No deduction|
|Married filing separately||Less than $10,000||Partial deduction|
|$10,000 or more||No deduction|
|If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the "Single" filing status.|
Roth IRA Income Limits
The IRS has specific income restrictions regarding who can contribute to Roth IRAs.
Income limits based on your Roth IRA eligibility phase out for single filers with a MAGI between $129,000 – $144,000, and between $204,000 – $214,000 for married couples who are filing jointly.
Single filers with a MAGI above $140,000 and married couples who are filing jointly with a MAGI above $208,000 are not eligible for Roth IRA contributions. See Roth IRA rules or IRS pub 590 for more information.
If you exceed these income limits, you may want to consider contributing to a non-deductible traditional IRA, which allows them to still contribute up to the $6,000 IRA limit each year. These contributions can then be converted – or rolled into – a Roth IRA.
The following table shows the complete Roth IRA Income Limits for 2022:
|Filing Status||Modified AGI||Allowable Contribution|
|Married filing jointly or qualifying widow(er)||$204,000 or less||Up to the annual contribution limit|
|more than $208,000 but less than $214,000||Partial amount|
|$215,000 or more||No contribution|
|Married filing separately and you lived with your spouse at any time during the year||less than $10,000||Reduced amount|
|$10,000 or more||No contribution|
|Single, head of household or married filing separately and you did not live with your spouse at any time during the year||$129,000 or less||No contribution|
|more than $129,000 but less than $144,000||Partial contribution|
|$144,000 or more||No contribution|
Did You Contribute Too Much to Your IRA?
Note: The deduction and phase-out limits may affect your ability to make contributions. Find out what happens if you contribute too much to an IRA.
IRA Contribution Deadlines
Tax season is a great reminder to make retirement account contributions if you don’t do it throughout the previous calendar year. The good news is tax laws are written so you can make Roth and traditional IRA contributions for the previous tax year until the tax filing deadline.
Even though the calendar year may be over, you can still contribute to your IRA until the tax deadline, which is usually April 15.
Remember: if you make IRA contributions between Jan. 2 and April 15, you may need to specify which tax year you are contributing to. You can choose to contribute to the last year’s or the current year’s IRA limit during these dates.
More information about IRAs
Individual Retirement Arrangements (IRAs) are great investment vehicles. The benefits you receive from the tax deferrals are a great way to grow your investments without the drag of taxes slowing you down your investments.
Max out your IRAs if possible. It is important to max out IRA investment if possible because you only have one opportunity to do so. Once the window of eligibility closes, it is closed for good.