Roth IRA Contribution Limits for 2019

Explore this type of retirement account, which grows tax-free.

Traditional and Roth IRAs are both retirement accounts, but they are very different. A Roth IRA differs from a traditional IRA in that your contributions to a Roth account are not tax-deductible, but those contributions — and your investment earnings — grow tax-free. In other words, when you make retirement withdrawals from your Roth IRA you can collect them tax-free.

In 2018, Roth IRA contribution limits were $5,500 and $6,500 (for people age 50 and older), but for 2019, those limits increase to $6,000 and $7,000, respectively — the first increase since 2013. And here’s some more good news: You can contribute to a Roth and still invest in a 401k.

This guide to Roth IRA contribution limits will cover the following:

Roth IRA Income and Contribution Limits for 2019

As you can see in the table, there are 2019 Roth IRA contribution limits — and there are also income limits, which you’ll read about later. Once you reach age 50, you can start making “catch-up” contributions to your Roth IRA, which means you can invest an extra $1,000 over the base amount each year. To do that, you must have at least $6,500 in taxable income. This is particularly attractive for married couples who are age 50 and over and can invest an extra $2,000 in their combined accounts each tax year.

Maximum Retirement Account Contributions for 2019
Roth and Traditional IRA401(k)
Maximum Contribution up to Age 49$6,000$19,000
Maximum Contribution Age 50 and Older$7,000$25,000

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If you think $1,000 extra in Roth contributions won’t make much of a difference in your Roth IRA, you’re wrong. Over 20 years, that extra $1,000 each year could add $45,000 to your retirement savings. Assuming you take the standard 4% withdrawals each year, you’d have an extra $150 each month during retirement.

Understanding Earned Income

Roth IRA rules include income limits. Your earned income is simply all the money you make from salaries, wages, tips, bonuses and commissions, as well as earnings from long-term disability benefits, union strike benefits and military differential pay.

Your Roth IRA contribution limits for 2019 depend on your modified adjusted gross income. You can calculate that by first subtracting all allowable deductions from your gross income, which equals all the money you’ve earned from all sources. This gives you your adjusted gross income. Your adjusted gross income plus the value of certain deductions, such as for student loan interest, equal your MAGI. Your MAGI and AGI might be the same if you do not have these deductions.

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Roth IRA Income Limits

The IRS publishes income and contribution limits annually for Roth IRA investors. It does this to keep up with the cost of living, but because those limits increase in $500 increments, there’s no guarantee you’ll see a cost of living increase every year.

Just as contribution limits have increased for the first time since 2013, so have income limits. The amount of your limit depends on your tax filing status:

  • Single filers’ income limits start at $122,000 (up from $120,000) and end at $137,000 (up from $135,000).
  • Married filing jointly and qualified widowed filers’ income limits start at $193,000 (up from $189,000) and end at $203,000 (up from $199,000).
  • Married filing separately filers’ income limits start at $122,000 (up from $120,000) and end at $137,000 (up from $135,000).

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What Happens If You Contribute Too Much to a Roth IRA?

Contributing more to your Roth IRA than you’re allowed to can result in fairly severe consequences. You might face a tax penalty or have to withdraw the amount in excess of your contribution limit. With a tax rate of 6% annually on that excess amount, it’s important to stay within the limits.

That said, the amount of money you contribute to your Roth IRA might be limited by the IRS, but something called a “backdoor Roth IRA” — which enables you to convert your traditional IRA into a Roth IRA — could provide a way for you to circumvent income limits. There is no limit on conversion amounts — you can roll over however much you have in your traditional IRA without any penalty.

This process is definitely legal, but it’s somewhat complicated. The first thing you need to know is that you’ll have to pay taxes on your traditional IRA. The second thing is that the amount you convert into the Roth IRA will likely count as income. But if you have a year when your income is particularly low — perhaps you lost a job — it would be a good time to make the conversion.

In addition, if you’re younger than 59 1/2 and you convert funds from your traditional IRA into your Roth IRA, you’ll need to wait five years to have penalty-free access to the money because the IRS treats conversions differently than it treats contributions. Whatever you decide, talk to your tax accountant about it first and make sure you fully understand the tax implications.

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Is a Roth IRA Right for You?

It can be tough to decide which retirement plan is for you. Here are some tips to help you decide if a Roth IRA fits the bill.

If you expect a higher tax rate as you age, a Roth IRA is a good choice for a retirement plan. Because you pay taxes on your money before it goes into a Roth IRA, you’ll pay less tax and still get tax-free investment growth if your current tax rate is lower than you expect your future tax rate to be. You can open a Roth IRA at any age — but you can never contribute more than your earned income — and enjoy withdrawing that money tax-free when you’re 59 1/2, as long as you’ve had the account open for five years. In addition, you can always withdraw money without penalty to pay for qualified higher education expenses.

Unlike a traditional IRA, which requires that you start taking distributions by age 70 1/2, you are never required to take distributions from your Roth IRA. So if you want to pass money on after your death, this account is a great choice.

The primary downside to opening a Roth IRA is that you won’t be eligible if your income is too high — keep in mind that the contribution limits decrease at certain MAGI levels and keep on decreasing until you can no longer contribute.

Barri Segal is a personal finance writer. She aims to help people better their lives through financial success.

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