IRA Deduction Limits · Roth IRA Amount. No, there is no maximum income limit for a traditional IRA. Anyone can contribute to a traditional IRA. While a Roth IRA has a strict income limit and people with incomes above it can't contribute at all, that rule doesn't apply to a traditional IRA.
The ability to make non-deductible contributions regardless of income level makes traditional IRAs a valuable retirement savings account that can be converted into a clandestine Roth IRA. If neither you nor your spouse have a retirement plan at work, your contributions (up to the annual maximum) are fully deductible. Contributions to IRAs and 401 (k) plans are limited in certain ways, in part to level the playing field between high-income and lower-income taxpayers. Remember that you are also not subject to income limits when you make contributions to a SIMPLE IRA or an SEP IRA; options that are only available if your employer offers them, if you are a small business owner, or if you are self-employed and can open one on your own.
You can contribute to a traditional or Roth IRA even if you participate in another retirement plan through your employer or company. If you file a joint return and have taxable compensation, you and your spouse can contribute to your separate IRAs. If your spouse is covered by a plan at work, there's also a limit to the amount of tax-deductible contributions you can make to your traditional IRA each year. If you or your spouse are covered by an employer-sponsored retirement plan and your income exceeds certain levels, you may not be able to deduct your full contribution.
You may still want to make a non-deductible contribution, either because you prefer to allow your investments to grow tax-free and defer income taxes or because you want to make a clandestine contribution to the Roth IRA by contributing to your traditional IRA and then converting it into a Roth account. Although they share the same contribution limits, traditional IRAs and Roth IRAs are subject to different rules about who can contribute to them and how much you can contribute or deduct. However, you may not be able to deduct all of your traditional IRA contributions if you or your spouse participate in another retirement plan at work. For traditional IRA contributions, the amount you can deduct may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels.
Many, but not all, Americans can invest in a traditional IRA with pre-tax funds and claim a deduction for their contribution in the year in which it is made. Contributions to traditional IRAs and 401 (k) accounts are made with pre-tax money, which can significantly reduce a worker's taxable income during the year. Your total contributions to your IRA and your spouse's IRA cannot exceed your combined taxable income or the annual IRA contribution limit multiplied by two, whichever is less.