IRA - Contribution Limits & Deductibility

Anyone at any age with earned income (or files jointly with a spouse who earns compensation).

If you are covered by a retirement plan at work:

2023 tax year: deductions for contributions are reduced (phased out) if MAGI is between $73,000 and $83,000 (single) or $116,000 and $136,000 (married filing jointly) or less than $10,000 (married, filing separately).

2022 tax year: deductions for contributions are reduced (phased out) if MAGI is between $68,000 and $78,000 (single) or $109,000 and $129,000 (married, filing jointly) or less than $10,000 (married, filing separately).

Anyone at any age with earned income subject to income limits (or files jointly with a spouse who earns compensation).

2023 tax year: maximum yearly contribution limits are reduced (phased out) if MAGI is between $138,000 and $153,000 (single) or $218,000 and $228,000 (married, filing jointly) or less than $10,000 (married, filing separately).

2022 tax year: maximum yearly contribution limits are reduced (phased out) if MAGI is between $129,000 and $144,000 (single) or $204,000 and $214,000 (married, filing jointly) or less than $10,000 (married, filing separately).

Anyone, of any age, subject to certain income limits, as long as the designated beneficiary (the child for whom a contribution is made) is younger than 18.

Maximum yearly contribution phased out between MAGI of $95,000 (single) and $190,000 (joint). Taxpayers with MAGI above $110,000 and $220,000. 

2023 tax year: $6500 per individual ($7500 if age 50 or over) or 100 percent of your earned income, whichever is less.

2022 tax year: $6,000 per individual ($7,000 if age 50 or over) or 100 percent of your earned income, whichever is less.

Spousal Contributions: The maximum contribution amount can also be made to a nonworking spouse's IRA—subject to certain requirements.

Note: The maximum contribution amount can be deposited into a Traditional IRA, a Roth IRA or split between the two.

2023 tax year: $6500 per individual ($7500 if age 50 or over) or 100 percent of your earned income, whichever is less.

2022 tax year: $6,000 per individual ($7,000 if age 50 or over) or 100 percent of your earned income, whichever is less.

Spousal Contributions: The maximum contribution amount can also be made to a nonworking spouse's IRA—subject to certain requirements.

Note: The maximum contribution amount can be deposited into a Traditional IRA, a Roth IRA or split between the two.

$2,000 per child per year under age 18 if contributor's MAGI is less than $110,000 (single) or $220,000 (joint). Eligibility to contribute is phased out for single filers with MAGI between $95,000 and $110,000 and for joint filers with MAGI between $190,000 and $220,000.

Contributions to CESAs are allowed regardless of Traditional or Roth IRA participation.

The deductibility of your contribution varies depending on your Modified Adjusted Gross Income (MAGI) and whether you have a retirement plan at work.

If you are covered by a retirement plan at work:

2023 tax year: Fully deductible if MAGI is less than $73,000 (single)or $136,000 (married filing jointly); partially deductible if MAGI is between $$73,000 and $83,000 (single) or $116,000 and $136,00 (married filing jointly), $0-$116,000 (married filing separately); No deduction if MAGI is over $83,000 (single) or $136,000 (married jointly).

2022 tax year: No changes from 2021.

If either you or your spouse is covered by a retirement plan at work (but not both):

2023 tax year: Modified AGI limits for certain married individuals are increased. If your spouse is covered by a retirement plan at work and you aren’t, and you live with your spouse or file a joint return, your deduction is phased out if your modified AGI is $218,000- $228,000. If your MAGI is $228,000 or more, you can’t take a deduction for contributions to a traditional IRA.

2022 tax year: Fully deductible if your MAGI is less than $198,000; partially deductible if MAGI is between $198,000 and $208,000; not deductible if MAGI is over $208,000.

Neither spouse participates in a qualified plan: Contributions are fully deductible up to the amount of the contribution limit.

Not Deductible

Not Deductible

Taxes on gains, dividends and interest are deferred until money is withdrawn. No penalties on withdrawals if taxpayer is: 1) Age 59 1/2, 2) Buying a first home ($10,000 lifetime maximum), 3) Paying for college expenses or 4) Disabled or deceased.

Contributions may be withdrawn tax-free at any time. Earnings may be withdrawn tax-free if account has been open 5 years and taxpayer is: 1) Age 59 1/2, 2) Buying a first home ($10,000 lifetime maximum) or 3) Disabled or deceased. Contributions from conversion IRAs must remain on deposit for 5 years to avoid withdrawal penalty.

All withdrawals, including earnings, are tax-free for qualified education expenses.

Withdrawals of contributions and earnings are subject to 10% penalty unless taxpayer is: 1) Age 59 ½, 2) Buying a first home ($10,000 lifetime maximum), 3) Paying for college expenses or 4) Disabled or deceased.

Withdrawals of earnings are subject to taxes and a 10% penalty unless account has been open 5 years and taxpayer is: 1) Age 59 ½, 2) Buying a first home or 3) Disabled or deceased. Withdrawals of earnings for college expenses will be subject to taxes but not penalties.

Withdrawals after the beneficiary reaches age 30 are subject to taxes and a 10% penalty, unless rolled over to a family member's Coverdell Education Savings Account.

Owner must start withdrawing by age 73.

Owner is not required to take distributions at any age.

Funds must be withdrawn by the time the beneficiary child reaches age 30, or according to special needs exception defined by law.

Balance converted is taxable for the tax year in which the transfer occurs. Also, a withdrawal penalty applies if these funds are withdrawn within the first 5 years.

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