Traditional IRA and Roth IRA Contribution Limits

Understanding Current and Historical IRA Contribution Limits

Each year, the United States government allows individuals to contribute a certain amount of money into a traditional IRA or a Roth IRA account.
Each year, the United States government allows individuals to contribute a certain amount of money into a traditional IRA or a Roth IRA account. jygallery/Getty Images

The following chart details the current and historical Traditional IRA and historical Roth IRA combined contribution limits going back over a decade-and-a-half.  The two columns represent the combined contribution limits for those 49 years old or younger and those 50 years or older (investors who reach 50+ years old are entitled to put aside more money each year in pursuit of financial independence or retirement security).

Traditional IRA and Roth IRA Contribution Limits

TAX YEARAGE 49 & BELOWAGE 50 & ABOVE
2002-2004$3,000$3,500
2005$4,000$4,500
2006-2007$4,000$5,000
2008$5,000$6,000
2009$5,000$6,000
2010$5,000$6,000
2011$5,000$6,000
2012$5,000$6,000
2013$5,500$6,500
2014$5,500$6,500
2015$5,500$6,500
2016$5,500$6,500
2017$5,500$6,500
2018$5,500$6,500

As you research these limits, you will most likely notice that Traditional IRA contribution limits and Roth IRA contribution limits are written into the U.S. tax code in a way that they are always identical.  An investor can contribute to either a Traditional IRA or Roth IRA, or split the contribution between the two, but the combined annual contribution limit still applies.  For example, in 2017, if you were 28 years old, you could contribute a total of $5,500 to either your Traditional IRA or your Roth IRA without exceeding the contribution limits and being hit with significant penalties.

 Stated differently, if you put $2,000 into a Traditional IRA, you couldn't put more than $3,500 into a Roth IRA that same year.

On the other hand, you can fund the maximum amount in either a Roth IRA and Traditional IRA and still take advantage of another employer-sponsored retirement plan, such as a 401(k), 403(b)SIMPLE IRA, or even SEP-IRA.

 (For more information on those retirement accounts, read my Guide to Retirement Account Contribution Limits.)

How are IRA Contribution Limits Determined?

Under the present law, Traditional IRA and Roth IRA contribution limits are set to increase with the inflation rate in $500 increments.  This is the reason the contribution limit doesn't increase in some years; inflation wasn't high enough to trigger the next increment so it remained steady.

Please note that both Traditional IRA and Roth IRA contribution limits are "use-it-or-lose-it".  You cannot roll them forward to a future year.  The latest deadline for meeting the contribution limit is the initial tax filing deadline, usually April 15th, unless it falls on a weekend.  For example, if you wanted to fund your retirement account up to the maximum permissible contribution for tax year 2017, you would have until April 17, 2017, to get the money into the account.

Funding Your Traditional and/or Roth IRAs

When funding your Traditional IRA or Roth IRA, contributions do not have to be made in one lump sum at the same time.  For example, if you were 55 years old in 2016, and wanted to have $125 taken out of your checking account automatically each week for the entire year to fund your Roth IRA account, you could do that.

 By the end of the year, you'd have deposited exactly $6,500, which the most you are allowed to contribute.

There are certain income limitations on whether or not you can fund a Traditional IRA and take the tax deduction or fund a Roth IRA altogether.  If you are eligible for both, a Roth IRA is almost always the better choice as a Roth IRA is the closest thing to a perfect tax shelter that exists in the United States for the typical investor.

There are a plethora of rules around Traditional IRAs and Roth IRAs, particularly involving withdrawing your money before you reach 59.5 years old.  If you find yourself in need of your funds, there are eight ways you can potentially avoid the 10% early withdrawal penalty that applies to any other taxes that might be owed.