IRA Contribution Limits
For 2013 and 2014, the maximum you can contribute to all of your traditional and Roth IRAs is the smaller of:
- $5,500 ($6,500 if you’re age 50 or older), or
- your taxable compensation for the year
The IRA contribution limit does not apply to rollover contributions or qualified reservist repayments.
IRA Deduction Limits
- Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement plan at work (401(k), profit-sharing, SEP-IRA, SIMPLE IRA, SARSEP and certain pension plans) and your income exceeds certain levels.
- Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels.
- Your deduction is allowed in full if you (and your spouse, if you are married) are not covered by a retirement plan at work.
Roth IRA contribution limit
The same general contribution limit applies to both Roth and traditional IRAs. However, your Roth IRA contribution might be limited based on your filing status and income (modified AGI).
- If your filing status is married filing jointly or a qualified widow(er), you can only contribute up to the limit if you make less than $181,000. Contribution amounts are limited starting at $181,000 and are reduced to zero at $191,000.
- If your filing status is single, head of household or married filing separately, you can only contribute up to the limit if you make less than $114,000. Contribution amounts are limited starting at $114,000 and are reduced to zero at $124,000.
IRA contributions after age 70½
- You cannot make regular contributions to a traditional IRA in the year you reach 70½ and older.
- You can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.
Spousal IRAs
- If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions cannot be more than the taxable compensation reported on your joint return. It does not matter which spouse earned the compensation.
- If neither spouse participated in a retirement plan at work, all of your contributions will be deductible.
Can I contribute to an IRA if I participate in a retirement plan at work?
- You can contribute to a traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business.
- You might not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work.
- Roth IRA contributions might be limited if your income exceeds a certain level. (See above.)
Tax on excess IRA contributions
An excess IRA contribution occurs if you:
- Contribute more than the contribution limit.
- Make a regular IRA contribution to a traditional IRA at age 70½ or older.
- Make an improper rollover contribution to an IRA.
Excess contributions are taxed at 6% per year as long as the excess amounts remain in the IRA. The tax cannot be more than 6% of the combined value of all your IRAs as of the end of the tax year.
To avoid the excess contributions tax:
- withdraw the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
- withdraw any income earned on the excess contribution.
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401(k) and Profit-Sharing Plan Contribution Limits
Two annual limits apply to contributions:
- A limit on employee elective deferrals; and
- An overall limit on contributions to a participant’s plan account (including the total of all employer contributions, employee elective deferrals, and any forfeiture allocations)
Deferral limits for 401(k) plans
- The limit on employee elective deferrals (for traditional and safe harbor plans) is $17,500 (in 2013 and 2014).
- Generally, all elective deferrals made to all plans in which you participate are aggregated to determine if you have exceeded these limits.
Deferral limits for a SIMPLE 401(k) plan
The limit on employee elective deferrals to a SIMPLE 401(k) plan is $12,000 (in 2013 and 2014).
Plan-based restrictions on elective deferrals
These restrictions may further reduce the maximum allowable elective deferrals:
- Your plan's terms may impose a lower limit on elective deferrals
- If you are a manager, owner, or highly compensated employee (HCE), your plan might need to limit your elective deferrals to pass nondiscrimination tests
Catch-up contributions for those age 50 and over
If permitted by the 401(k) plan, participants who are age 50 or over at the end of the calendar year can also make catch-up contributions. The additional elective deferrals you may contribute is:
- $5,500 to traditional and safe harbor 401(k) plans (in 2013 and 2014)
- $2,500 to SIMPLE 401(k) plans (in 2013 and 2014)
- You do not need to be “behind” in your plan contributions to be eligible to make these additional elective deferrals.
Overall limit on contributions
Total annual contributions (annual additions) to all of your accounts in plans maintained by one employer (and any related employer) are limited. The limit applies to the total of:
- elective deferrals
- employer matching contributions
- employer nonelective contributions
- allocations of forfeitures
The annual additions paid to a participant’s account cannot exceed the lesser of:
- 100% of the participant's compensation or
-
$51,000 ($56,500 including catch-up contributions) for 2013 ($52,000, or $57,500 including catch-up contributions for 2014)
There are separate, smaller limits for SIMPLE 401(k) plans.
Compensation limit for contributions
Remember that annual contributions to all of your accounts - this includes elective deferrals, employee contributions, employer matching and discretionary contributions and allocations of forfeitures to your accounts - may not exceed the lesser of 100% of your compensation or $51,000 for 2013 and $52,000 for 2014. In addition, the amount of your compensation that can be taken into account when determining employer and employee contributions is limited. The compensation limitation is $255,000 for 2013 and $260,000 for 2014.
