How much can I contribute to my IRA account?

Almost anyone receiving taxable income can contribute to a traditional IRA. Whether or not you can contribute to a Roth IRA will depend on your adjusted gross income. However, any IRA will limit the amount you can contribute annually. The following provides an overview of contribution limits for Traditional and Roth IRAs.

For 2020, you can generally contribute up to $6,000 to your IRA, plus an additional $1,000 if you are over the age of 50. This amount can be contributed to your Traditional IRA, Roth IRA, or split between both types of IRAs. These contributions are subject to income and eligibility requirements, which include the following:

Eligible Compensation Requirement

You must have eligible taxable compensation in order to be eligible to contribute to an IRA. Eligible compensation includes taxable wages, tips, other compensation reported in Box 1 of Form W-2, commissions, and self-employment income. Your IRA contribution for the year cannot exceed the eligible compensation amount that you receive for the year. For example, if your eligible compensation is only $4,000, your contribution is limited to $4,000, regardless of the $6,000 IRS limit.

For both Traditional and Roth IRAs, please see the following article to learn more about your Income Limit on IRA Contributions.

Spousal Income

If you have little or no W-2 income, but you are married and file a joint tax return with your spouse, eligible W-2 compensation received by your spouse can be used to contribute to an IRA on your behalf. Note that your spouse’s compensation and your compensation must be enough to cover both contributions to your IRA and any contributions made to your spouse’s IRA. For example, if each of you only had $5,000 in includable W-2 compensation, the limit you could both put into IRAs would be $10,000. However, if you had $4,000 in includable W-2 compensation and your spouse had $10,000. You would have a total of $14,000 that might possibly be deferred. You could each max out your IRA annual contributions of $6,000 and jointly save $12,000 toward retirement (plus an additional $1,000 each if you were both 50 years old by the end of the year). This is of course subject to other contribution limitations. 

Age Limit on Traditional IRAs

Contributions cannot be made to your Traditional IRA beginning the year you reach age 70 ½. If you are age 70 ½ or older this year and want to make an IRA contribution, you may make it to a Roth IRA if you meet additional income requirements.

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