While the tax benefits of a Roth IRA are generous—your money grows tax-free, and you can withdraw it tax-free after age 59 ½, once you've had the account for at least five years—there are specific limitations to consider.
Here are four things to keep in mind about Roth IRA contribution limits and rules.
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#1: Roth IRA contributions won't get you an up-front tax deduction
This is because they’re made on an after-tax basis—in other words, with dollars you’ve already paid taxes on. You don’t get an immediate tax break like you might with a traditional IRA, but you can withdraw contributions or investment earnings later without owing tax as long as you follow IRS rules for qualified withdrawals.
#2: The maximum annual contribution is the same for Roth IRAs and traditional IRAs
But if you have multiple IRAs (such as a Roth and a traditional IRA), your combined contributions can’t exceed the annual per-person limit. For 2023, total IRA contributions for each person are limited to $6,500 if you’re under age 50, and $7,500 if you’re 50 or older. To count toward the current year maximum, you must schedule your contributions before the annual tax-filing deadline if you want them to count for 2023.
“If you’re new to IRAs, keep in mind that contribution limits are tied to inflation and generally increase over time based on IRS rules,” said Rob Williams, managing director of financial planning, retirement income, and wealth management for the Schwab Center for Financial Research. “Be sure to check the maximum contribution each year.”
#3: You must meet income limits to contribute to a Roth IRA
If you file taxes as a single person, your modified adjusted gross income (MAGI) must be under $138,000 for 2023 to contribute the full amount. At higher income levels, your maximum contribution declines the more you earn. And if your MAGI is $153,000 or more, you’re no longer eligible to contribute to a Roth IRA.
If you’re a married couple filing jointly, you can contribute up to the maximum amount to each spouse’s IRA if your combined MAGI is under $218,000 for 2023. As with single filers, your contribution limits decrease as your MAGI rises. So, couples who make $228,000 or more combined are not eligible to contribute.
Roth IRA income limits for 2023
|Single filers (MAGI)||Married filing jointly (MAGI)||Married filing separately (MAGI)||Maximum contribution for individuals under age 50||Maximum contribution for individuals age 50 and older|
|under $138,000||under $218,000||$0||$6,500||$7,500|
|$153,000 & over||$228,000 & over||$10,000 & over||$0||$0|
#4: You can usually contribute to a Roth IRA, even if you have a 401(k), 403(b), or 457 plan at work
Keep in mind, Roth IRA income limits still apply. And if your budget doesn't allow you to contribute to both accounts, it's usually a good idea to max out your employer-sponsored account first.
Once you're contributing at least up to the full employer match there, saving more in a traditional IRA or Roth IRA could be your next best step.
Withdrawals from an IRA prior to age 59½ may be subject to a 10% Federal tax penalty. For a Roth IRA, tax-free withdrawals of earnings are permitted five years after first contribution creating account. Earnings withdrawn prior to that may be subject to ordinary income taxes and a 10% Federal tax penalty.
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