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Tax Resource Center

IRA and CESA Contribution and Deduction Limits & Rules

Tax-deferred accounts have limits on the amount of money that can be contributed per year. In some cases the rules get very detailed and take into consideration how you file your taxes, your income, and your work status. Here’s some information about the tax ramifications of how you fund your tax-deferred accounts as well as additional deduction limits and withdrawal rules.

Traditional IRA Contributions

Contribution Limits

  • 2015 and 2016: Lesser of $5,500 or 100% of earned income across all your IRA accounts
  • No contributions are allowed beginning the year you reach age 70½

Catch-up Contributions

  • If you’re age 50 or older, you can increase your traditional IRA contribution to $6,500 for 2015 and 2016

Contribution Deadline

  • Typically, contributions must be made by April 15th for the previous year

Tax-Deductible Contributions

Your traditional IRA contributions may be tax-deductible, but there are several factors that may limit and disqualify you from the deduction, depending on whether you or your spouse are covered by a retirement plan at work and/or your income exceeds certain levels. You’re considered covered by an employer retirement plan if you or your spouse have:

  • A contribution plan (profit-sharing, 401(k), stock bonus, or money purchase pension)
  • An IRA-styled plan like a SEP, SARSEP, or SIMPLE IRA
  • A benefit plan (pension that pays a retirement benefit)

Income levels are determined by your Modified Adjusted Gross Income (MAGI), which is your annual adjusted gross income with certain deductions (e.g., student loan and IRA deductions) added back in.

 

If you file as single or head of household:

MAGI: $61,000 or less

Full deduction (up to your allowed contribution limit)

MAGI: More than $61,000 but less than $71,000 

Partial deduction

MAGI: $71,000 or over

No deduction

If you file as married (jointly) or a qualifying widower or widow:

MAGI: $98,000 or less

Full deduction (up to your allowed contribution limit)

MAGI: More than $98,000 but less than $118,000

Partial deduction

MAGI: $181,000 or over

No deduction

If you file as married (but file separately):

MAGI: Less than $10,000

Partial deduction

MAGI: $10,000 or more

No deduction

If you file as single, head of household, or a qualifying widow or widower:

MAGI: Any amount

Full deduction (up to your allowed contribution limit)

If you file as married (jointly) or separately with spouse not covered by a work plan:

MAGI: Any amount

Full deduction (up to your allowed contribution limit)

If you file as married (jointly) or separately with spouse covered by a work plan:

2015 MAGI: $183,000 or less

2016 MAGI: $184,000 or less

Full deduction (up to your allowed contribution limit)

2015 MAGI: More than $183,000 but less than $193,000

2016 MAGI: More than $184,000 but less than $194,000

Partial deduction

2015 MAGI: $193,000 or more

2016 MAGI: $194,000 or more 

No deduction

Roth IRAs Contributions and Deductions

Contribution Limits

  • 2015 and 2016: Lesser of $5,500 or 100% of earned income across all your IRA accounts 

Catch-up Contributions

  • If you’re age 50 or older, you may be able to increase your Roth IRA contribution to $6,500 for 2015 and 2016, based on MAGI limits

Contribution Deadline

  • Typically, contributions must be made by April 15th for the previous year

Tax-Deductible Contributions

  • Contributions for Roth IRA don’t qualify for tax deductions.

If you file as single, head of household, or married (filing separately) and didn’t live with your spouse at all during the year:

2015 MAGI: Less than $116,000

2016 MAGI: Less than $117,000

Full contribution

2015 MAGI: Equal to or greater than $116,000 but less than $131,000

2016 MAGI: Equal to or greater than $117,000 but less than  $132,000

Reduced contribution

2015 MAGI: $131,000 or over

2016 MAGI: $132,000 or over

No contribution

If you file as married (jointly) or a qualifying widower or widow:

2015 MAGI: Less than $183,000

2016 MAGI: Less than $184,000

Full contribution

2015 MAGI: Equal to or greater than $183,000 but less than $193,000

2016 MAGI: Equal to or greater than $184,000 but less than $194,000

Reduced contribution

2015 MAGI: $193,000 or over

2016 MAGI: $194,000 or over

No contribution

If you file as married (filing separately) and lived with your spouse at any time during the year:

2015 or 2016 MAGI: Less than $10,000

Reduced contribution

2015 or 2016 MAGI: $10,000 or more

No contribution

Coverdell Education Savings Account (ESA) Contributions and Deductions

Contribution Limits

  • Limit of $2,000 per year, per student total from all contributors (across any/all eductional savings accounts held) 
  • Contributions can be made by the student, parents, or any other individual or organization
  • An individual's contributions for a student may have certain limitations based on the contributor's MAGI (see below)
  • You do not need earned income in order to make a contribution

Contribution Deadline

  • Typically, contributions must be made by April 15th for the previous year.

Deductions

  • ESA contributions aren’t deductible.

If the contributor files as single:

MAGI: $95,000 or less

Full contribution

MAGI: $95,001 to $110,000

Partial contribution

MAGI: More than $110,000

No contribution

If the contributor files as married (jointly):

MAGI: $190,000 or less

Full contribution

MAGI: $190,001 to $220,000

Partial contribution

MAGI: More than $220,000

No contribution