Roth IRA Income & Contribution Limits for 2023
A Roth individual retirement account is a popular type of IRA. Each tax year, the Internal Revenue Service places income and contribution limits on retirement accounts, including Roth IRAs. Caps depend on a person’s income, filing status and age.
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- Published: August 22, 2023
- Updated: October 6, 2023
- 7 min read time
- This page features 5 Cited Research Articles
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- The maximum contribution limit for a Roth IRA in 2023 is $6,500 for individuals under 50 and $7,500 for those aged 50 and older.
- The income limits for Roth IRA contributions in 2023 are $153,000 for single filers, $228,000 for married couples filing jointly and $10,000 for married couples filing separately who lived with their spouse any time during the year.
- If your modified adjusted gross income exceeds the applicable limit, your contribution may get reduced or phased out.
Eligibility and Income Limits for Roth IRA Contributions
Anyone with earned active income (wages, self-employment income, etc.) can contribute to a Roth IRA. Passive income, including rental income and investment income, does not qualify for Roth IRA contributions. There is no age restriction for contributing to a Roth IRA.
However, the IRS has retirement income and filing status limits that affect eligibility. It sets caps based on your modified adjusted gross income (MAGI). The higher your MAGI, the less you can contribute to a Roth until you reach a cap and cannot contribute at all.
- Up to the annual limit if your MAGI is below a certain threshold
- A reduced amount if your MAGI grows within a certain range
- No contribution if your MAGI exceeds a certain threshold
Roth IRA Contribution Income Limits for 2023
A fundamental element of the IRS’s calculations determining Roth IRA contribution levels is modified adjusted gross income (MAGI).
- Single people, heads of households and married people filing separate tax returns must earn less than $138,000 to be eligible to make a maximum contribution.
- Married couples who file jointly or qualifying widow(er)s must earn less than $218,000 to be eligible to make a maximum contribution.
- That income limit is $153,000 for single filers, heads of households or married people filing separately and who did not live with their spouse at any time during the year and $228,000 for married couples filing jointly or a qualifying widow(er).
- For married individuals filing separately and who lived with their spouse at any time during the year, the max Roth IRA contribution amount is $10,000 each.
Roth IRA Contribution Limits for 2023
Roth IRAs have maximum contribution limits with no minimums. For 2023, the maximum individual contribution limit is $6,500 for individuals under 50. People aged 50 and older can make an additional $1,000 catch-up contribution ($7,500 total).
Contribution limits apply if your income and filing status meet eligibility criteria. If your income exceeds the MAGI limit, you may get phased out of making any direct Roth IRA contributions.
If such a situation occurs, you can utilize a backdoor Roth IRA conversion strategy to contribute funds to your Roth account. You make a non-deductible contribution to a traditional IRA, then convert that account into a Roth account.
Calculating Your Maximum Allowable Contribution for Roth IRA
To calculate your maximum allowable contribution to a Roth IRA, add up your income for the year: wages, salaries, tips, bonuses, commissions and self-employment income. Don’t include interest, dividends, capital gains, pensions, annuities or Social Security benefits. If you’re below the threshold for your living situation, you can make the maximum contribution.
Are you 50 or older? If so, add in your $1,000 catch-up contribution.
Verify the IRS’s contribution limits ($6,500 for those under 50 or $7,500 for 50 and older in 2023) and subtract any contributions made to other IRAs, such as a traditional IRA. But contributions made under a SEP plan do not affect the amount you can contribute to an IRA on your own behalf.
You can use a Roth IRA calculator or an IRS table to find out how much you can contribute based on your MAGI and filing status. Consult with a financial advisor or tax professional if you have questions or doubts about calculating your maximum allowable contribution.
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Tips for Maximizing Your Roth IRA Contributions
Maximizing your Roth IRA contributions allows you to get the most out of your retirement planning and investments. The tip for maximizing your contributions is to create your account early on and max out your contributions yearly.
After you’ve created your account and have started to max out your contributions, you can take advantage of catch-up contributions when you turn 50.
Ensure the money doesn’t sit in a cash (or money market) fund over the long term. Instead, pick investment funds appropriate for your age, risk tolerance and investment goals.
Other strategies include looking for ways to reduce your MAGI and making use of the backdoor Roth IRA conversion.
Additional Considerations for Roth IRA Limits
There are added considerations for Roth IRA limits to be aware of. They include the impact of marriage, Roth IRA conversions and changes in your annual income. Learn how these affect your contribution eligibility.
There are no limits on the number of IRA accounts you can have, but you can only contribute to the maximum level for each type of IRA you have. In short, even if you have five Roth IRA accounts, you can only put $6,500 total into them during 2023.
You can use a backdoor Roth IRA conversion more than once, although there may be better long-term investment strategies to investigate.
Marriage and Roth IRA Contributions
- Individual Contribution Limits
- Spouses have individual contribution limits for Roth IRAs.
- Spousal IRAs
- If one spouse has little or no earned income, but the other spouse does, the spouse with the larger income can contribute to a spousal IRA on behalf of the non-working spouse based on the working spouse's income.
- Income Limits
- Income limits for Roth IRA contributions apply to the couple's modified adjusted gross income, depending on their filing status and whether they live together or separately.
- Backdoor Roth IRAs
- Married couples can use a backdoor Roth IRA conversion strategy to contribute to a Roth IRA even if their income exceeds MAGI limits.
- Inherited Roth IRAs
- A spouse can inherit a Roth IRA from a deceased spouse and treat it as their own.
Roth IRA Conversions and Their Impact on Contribution Limits
A Roth IRA conversion turns a traditional, SEP or SIMPLE IRA — or employer-sponsored retirement account such as a 401(k) — into a Roth IRA. But when you roll over a traditional 401(k) to a Roth IRA, you’ll owe income taxes on that money in the year when you make the switch.
Conversions don’t affect contribution limits. In addition, conversion amounts are separate from contribution limits, and there’s no limit to the amount of money you can convert. However, it’s crucial to consider the tax implications of any conversion.
Impact of Changing Income on Roth IRA Contribution Eligibility
Income changes during the year may move you into a different eligibility range, meaning your Roth IRA contribution eligibility may be affected. Reassess your eligibility based on the updated income. If your income stays within the eligibility range or falls below the eligibility range for Roth IRA contributions in a tax year, you can contribute up to the maximum allowed limit.
If your income exceeds the MAGI limit, you might find yourself phased out of making direct contributions to your Roth account. In that case, you may have to re-characterize your contributions or pay taxes on excess contributions. Another option would be to explore alternative retirement investment options based on your new income level.
FAQs About Roth IRA Income & Contribution Limits
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5 Cited Research Articles
- Internal Revenue Service. (2023, April 4). Publication 590-A (2022), Contributions to Individual Retirement Arrangements (IRAs). Retrieved from https://www.irs.gov/publications/p590a#en_US_2022_publink100074297
- Internal Revenue Service. (2022, October 26). Amount of Roth IRA Contributions That You Can Make For 2023. Retrieved from https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023
- Internal Revenue Service. (2022, October 26). Roth IRAs. Retrieved from https://www.irs.gov/retirement-plans/roth-iras
- Internal Revenue Service. (2022, September 19). Individual Retirement Arrangements (IRAs). Retrieved from https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras
- Esswein, P. (2019, November 9). Does Rental Income Count for IRA Contributions? Retrieved from https://finance.yahoo.com/news/does-rental-income-count-ira-195706341.html
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