2013 Traditional & Roth IRA Maximum Contribution Limits Increase for First Time in Years




Update: the 2016 maximum IRA contributions have since been released if you are looking for current information. You can also find the the 2011, 2012, 2014, and 2015 maximums at those links.

Last week I noted the increase of the 2013 maximum 401K contribution.

At the same time, the IRS also announced that the 2013 IRA maximum contribution and income limits were increasing as well, and it’s a nice 10% jump to $5,500 (up from the 2012 IRA contribution limit of $5,000).

This applies to both the Traditional IRA and Roth IRA. Note that you can have each, but the max contribution is for both combined.

The maximum IRA contribution actually did increase for the first time in years, and the income limits for both the Traditional IRA and Roth IRA increases as well.

2013 Maximum Roth & Traditional IRA Contribution

The IRS adjusts maximum contribution limits according to cost of living adjustments.

Over the last decade or so, when they increase the limits, they usually do it in $500 increments to match cost of living adjustments.

The maximum IRA contribution has been stuck at $5,000 since the 2008 calendar year, meaning there had been no changes for 4 straight years!




I’m happy to finally see an increase – particularly for those who don’t have the luxury of a 401K.

2013 Maximum IRA Catch-up Contribution Also Increases

maximum IRA contributionFor those age 50 and over, the 2013 IRA catch-up contribution will stay the same, by adding an additional $1,000. Since the standard contribution increases to $5,500, this means the 2013 maximum catch-up contribution is $6,500 in total.

You are eligible for the catch-up contribution if you turn 50 during any day in the calendar year.

2013 Traditional IRA Income Limits

IRA’s provide a great way to limit your tax liability in the present (Traditional IRA) and in the future (Roth IRA). There are, however, contribution phaseout limits that are based on your income. The good news is that those limits (also tied to inflation) will increase in 2013.

Keep in mind that with Traditional IRA’s, the limits and phaseouts only dictate how much you can deduct from your taxes, not if you can contribute or not. With Roth’s, the limits and phaseouts dictate how much  you can actually contribute, since Roth contributions are not deductible.

Traditional IRA income limits vary slightly from Roth IRA’s (which I’ll get to in a bit) in that they are tied to whether or not you your employer sponsors a retirement plan for you.

If you DO HAVE a retirement plan with your employer:

  • Single or head of household: If your MAGI is $59,000 (up from $58,000) or less, you can take a full deduction. If more than $59,000, but less than $69,000 (up from $68,000) – you get a partial deduction. If over $69,000, you cannot take a deduction.
  • Married filing jointly or qualifying widow(er): If your MAGI is $95,000 (up from $92,000) or less, you can take a full deduction. If more than $95,000, but less than $115,000 (up from $112,000) – you get a partial deduction. If over $115,000, no deduction.
  • Married filing separately: If your MAGI is less than $10,000, you can take a partial deduction. If $10,000 or more, no deduction.

If you DO NOT HAVE a retirement plan through an employer:

  • Single, head of household, or qualifying widow(er): Any MAGI permits a full deduction.
  • Married filing jointly or separately with a spouse who is not covered by a plan at work: Any MAGI permits a full deduction.
  • Married filing jointly with a spouse who is covered by a plan at work: If your MAGI is $178,000 or less, you can take a full deduction. If more than $178,000 (up from $173,000), but less than $188,000 (up from $183,000), you can take a partial deduction. If $188,000 or more, no deduction at all.
  • Married filing separately with a spouse who is covered by a plan at work: If your MAGI is less than $10,000, you can claim a partial deduction. If $10,000 or more, no deduction.

2013 Roth IRA Income Limits

The 2013 Roth IRA income phaseout limits are as follows:

  • Married filing jointly or qualifying widow(er): If your modified gross adjusted income (MAGI) is $178,000 (up from $173,000 in 2012), you can contribute up to the $5,500 max. If at least $178,000 up to $188,000 (both up $5,000 over 2012), your contribution limit is phased out (see IRS publication 590). If $188,000 and above, you cannot contribute to a Roth IRA.
  • Single, head of household, or married filing separately and you did not live with your spouse at any time during the year: If under $112,000 (up from $110,000 in 2012), you can contribute up to the $5,500 maximum. If at least $112,000 up to $127,000 (was $125,000 in 2012), your contribution limit is phased out. If $127,000 and up, you cannot contribute to a Roth IRA.
  • Married filing separately and you lived with your spouse at any time during the year:If MAGI is between $0 and $10,000, your contribution limit will phase out. If $0, you can contribute up to the $5,500 maximum ($6,500 if over 50 years old). If $10,000 and above, you cannot contribute to a Roth IRA.

Taking Advantage of IRA’s

If you have a bunch of old 401K’s sitting around, I’d definitely recommend looking at consolidating your 401K’s and rolling over to an IRA. They typically have lower fees associated and trades are often cheaper. I have a Roth and Traditional IRA with TradeKing.

Also, note that you can still contribute to your IRA’s for the 2012 calendar year up until the tax deadline next April. And you can begin contributing for 2013 on Jan. 1, 2013.

Will you contribute to an IRA for the 2012 calendar year? How much?

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