Details of the IRA Income Limits

Although an IRA can help you save for retirement and give you additional income to offset Social Security benefits, income limits set by the U.S. government restrict how much you can contribute to your IRA each year.

Annual Limits vs. Income Limits

Regardless of whether you hold a traditional or Roth IRA, you may only contribute a certain amount each year. The annual contribution limit varies, but only individuals who income falls below a pre-set annual amount are eligible to make a full contribution.

For example, if the contribution limit is $5000 and the income limit is $105,000, a single man who makes $40,000 a year would be eligible to make the full $5000 contribution.

Partial Contributions and Other Restrictions

An individual whose income exceeds the income limit for contributions may still be eligible to make a partial contribution to his IRA up to a certain point. He is not, however, permitted to make the maximum contribution to his IRA. Should the consumer’s income exceed the income limits by a significant amount, he may be ineligible to make IRA contributions at all. He still has the option, however, to make contributions to the IRAs of other individuals with incomes that fall within the guidelines as long as those contributions remain within the annual limit for the year in which they were made.

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