IRA - Contribution Limits & Deductibility

Traditional IRA

Eligibility

Anyone, at any age, with earned income (or who files jointly with a spouse who earns compensation).

Contribution Limits

There are no income limits for contributing to a Traditional IRA; however, deductibility may be limited if you or your spouse are covered by a workplace retirement plan.

2026 tax year:

• $7,500 per individual ($8,600 if age 50 or over) or 100 percent of your earned income, whichever is less.

2025 tax year:

• $7,000 per individual ($8,000 if age 50 or over) or 100 percent of your earned income, whichever is less.

Spousal Contributions: 

• The maximum contribution amount can also be made to a nonworking spouse's IRA—subject to certain requirements.

Note: The maximum contribution amount can be deposited into a Traditional IRA, a Roth IRA or split between the two. 

Deductibility

If you are covered by a retirement plan at work:

• Your ability to deduct Traditional IRA contributions depends on your MAGI.
• For the 2026 tax year, the deduction begins to phase out when MAGI is between $81,000 and $91,000 for Single, between $129,000 and $149,000 for Married Filing Jointly, and is not allowed if MAGI is $10,000 or more for those Married Filing Separately.
• For the 2025 tax year, the deduction begins to phase out when MAGI is between $79,000 and $89,000 for Single, between $126,000 and $146,000 for Married Filing Jointly, and is not allowed if MAGI is $10,000 or more for those Married Filing Separately.

If you are not covered by a retirement plan at work:

• For single filers who are not covered by a plan, contributions are fully deductible up to the annual contribution limit; regardless of income.          
• If you are married and your spouse is covered by a plan, the deduction is based on joint income. 
•  For the 2026 tax year, contributions are fully deductible if MAGI is $242,000 or less, partially deductible if MAGI is between $242,000 and $252,000, and not deductible if MAGI exceeds $252,000.
• For the 2025 tax year, contributions are fully deductible if MAGI is $236,000 or less, partially deductible if MAGI is between $236,000 and $246,000, and not deductible if MAGI exceeds $246,000.

If neither you nor your spouse is covered by a retirement plan at work:

• The phase-out rules do not apply, and contributions are fully deductible up to the annual contribution limit.

Tax Advantages

Taxes on gains, dividends, and interest are deferred until money is withdrawn.

Withdrawal Penalties

Withdrawals of contributions and earnings before age 59½ are subject to a 10% penalty unless taxpayer is: 

• Age 59 1/2,
• Buying a first home ($10,000 lifetime maximum),
• Paying for college expenses or, 
• Disabled or deceased.

Distribution Rules

Owner must start withdrawing by age 73.

Convert a Traditional IRA to a Roth IRA

Balance converted is taxable for the tax year in which the transfer occurs. Also, a withdrawal penalty applies if these funds are withdrawn within the first 5 years.

Roth IRA

Eligibility

Anyone, at any age, with earned income, subject to income limits (or who files jointly with a spouse who earns compensation).

Contribution Limits

2026 tax year:

• $7,500 per individual ($8,600 if age 50 or over) or 100 percent of your earned income, whichever is less.
• Maximum yearly contribution limits are reduced (phased out) if your MAGI is between $153,000 and $168,000 for Single or Head of Household, between $242,000 and $252,000 for Married Filing Jointly, or less than $10,000 for Married Filing Separately.
• You are not eligible to contribute to a Roth IRA if your MAGI is $168,000 or more for Single, $252,000 or more for Married Filing Jointly, or $10,000 or more for Married Filing Separately.

2025 tax year:

• $7,000 per individual ($8,000 if age 50 or over) or 100 percent of your earned income, whichever is less.
• Maximum yearly contribution limits are reduced (phased out) if your MAGI is between $150,000 and $165,000 for Single or Head of Household, between $236,000 and $246,000 for Married Filing Jointly, or less than $10,000 for Married Filing Separately.

Spousal Contributions:

• The maximum contribution amount can also be made to a nonworking spouse's IRA—subject to certain requirements.

Note: The maximum contribution amount can be deposited into a Traditional IRA, a Roth IRA or split between the two.

Deductibility

Contributions are not deductible.

Tax Advantages

Contributions may be withdrawn tax-free at any time. Earnings may be withdrawn tax-free if account has been open 5 years and taxpayer is:

• Age 59 1/2,
• Buying a first home ($10,000 lifetime maximum) or,
• Disabled or deceased.

Withdrawal Penalties

Contributions can be withdrawn at any time, tax- and penalty-free. Contributions from conversion IRAs must remain on deposit for 5 years to avoid withdrawal penalty.

Withdrawals of earnings before age 59½ are subject to taxes and a 10% penalty unless: Account has been open 5 years and taxpayer is: 

• Age 59 1/2,
• Buying a first home ($10,000 lifetime maximum) or,
• Disabled or deceased.

Withdrawals of earnings for college expenses will be subject to taxes but not penalties.

Distribution Rules

Owner is not required to take distributions at any age.

Convert to a Traditional IRA

Not available for Roth IRAs.

Coverdell Education Savings Account (CESA)

Eligibility

Anyone, of any age, subject to certain income limits, as long as the designated beneficiary (the child for whom the contribution is made) is younger than 18.

Contribution Limits

• $2,000 per beneficiary per year; beneficiary must be under age 18; contributor MAGI below $95,000 (Single/Head of Household) or $190,000 (Married Filing Jointly)
• Maximum yearly contributions are reduced (phased out) if MAGI is between $95,000 and $110,000 for Single or Head of Household, or between $190,000 and $220,000 for Married Filing Jointly
• If your MAGI is $110,000 or more ($220,000 or more if filing a joint return), you can't contribute to anyone's Coverdell ESA.
• All Coverdell ESA contributions must be in cash—checks, electronic transfers, or similar forms are acceptable. You cannot contribute stocks, bonds, or other assets.
• Contributions to Coverdell ESA's are allowed regardless of Traditional or Roth IRA participation.

Deductibility

Contributions are not deductible.

Tax Advantages

All withdrawals, including earnings, are tax-free for qualified education expenses.

Withdrawal Penalties

Withdrawals after the beneficiary reaches age 30 are subject to taxes and a 10% penalty unless rolled over to a family member’s CESA. Non-qualified withdrawals taxed + 10% penalty.

Distribution Rules

Funds must be withdrawn by the time the beneficiary child reaches age 30, or according to special needs exception defined by law.

Convert a Traditional IRA to a Roth IRA

Not available for Coverdell Education Savings Accounts.