What are Roth IRA Income Limits?

Key facts

  • Roth IRA contribution limits depend on age and income.
  • Contributions to Roth IRAs are taxed upfront but savings grow tax-free.
  • No taxes are assessed when distributions are taken, if certain requirements are met.

Individual retirement savings accounts are becoming more critical for professionals of every age. After all, even if government retirement benefits survive over the next century, relying on them exclusively will likely require a significant lifestyle change during retirement for most employees. People are living longer, and the savings required to cover living expenses, medical expenses, and leisure activities increases every year. Opening in a Roth IRA to complement other savings is a smart decision for savvy investors.

What is a Roth IRA?

While Traditional IRAs and 401(k) plans serve an important purpose, they aren’t the only option for retirement savings. Making the maximum contributions to a Roth IRA each year can add significantly to the overall value of retirement portfolios.

Unlike Traditional IRAs, contributions to a Roth are taxed immediately but savings are left to grow tax-free. When distributions are taken, assuming all relevant requirements are met, no taxes are assessed. More importantly, there is no age limit for making contributions, and there is no age at which distributions are required.

There can be an immediate tax benefit for low and moderate income workers that contribute to a Roth IRA, as contributions could qualify for the Retirement Savings Contributions Credit (Saver’s Credit). Note that there is a 15-month window to make contributions for each tax year, starting from the first of the year to when tax returns are due the next year.

Understanding Roth IRA Limits on Contributions

Those that meet the Roth IRA income limits can make the max Roth IRA contribution, which is reviewed and adjusted annually. Currently, Roth contribution limits for those under 50 are $6,000 and $7,000 for those 50 and older.  Unlike with the Traditional IRA or 401(k), contributions can be withdrawn at any time without taxes and penalties.

What Income Limits Apply to the Roth IRA?

Roth IRA income limits are adjusted annually, and different figures apply to married couples filing jointly and individuals. The chart below, published by the IRS, gives a complete breakdown of the 2020 Roth IRA Income Limits. Note that Roth IRA income limits are based on the modified adjusted gross income (MAGI), and not the standard adjusted gross income (AGI) figure that appears on tax returns. Some of the deductions that apply to income tax liability do not apply to Roth IRA contributions. For example, student loan interest paid is deducted when calculating the AGI but not the MAGI.

Filing status MAGI Eligible contribution
Married filing jointly or qualifying widow < $196,000 up to the limit
> $196,000 but < $206,000 a reduced amount
> $206,000 zero
Married filing separately < $10,000 a reduced amount
> $10,000 zero
Single, head of household, or married filing separately < $124,000 up to the limit
> $124,000 but < $139,000 a reduced amount
> $139,000 zero
Source: IRS website


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This article is not intended as tax advice, and Wealthfront does not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Wealthfront assumes no responsibility for the tax consequences to any investor of any transaction. Investors and their personal tax advisors are responsible for how the transactions in an account are reported to the IRS or any other taxing authority.