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PENSCO Blog

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2018 IRA Contribution Limits

  |  By Taylor Close

In 2018, Traditional IRA and Roth IRA contribution limits will remain at $5,500—a level that hasn’t changed since 2013. But changes are coming next year for IRA income phase-out ranges, which—for a Traditional IRA—allows you to deduct part or all of you IRA contributions from your taxable income.

IRA contribution limits and income phase-out ranges are set annually by the IRS, which determines contribution limits based on the cost of living. 2018 IRA contribution limits still include an additional $1,000 catch-up contribution for investors who are aged 50 and older. This catch-up contribution remains unchanged from 2017.

While almost anyone can make contributions to a Traditional IRA, those contributions are not always tax deductible. Traditional IRA deductions may be reduced, phased out or completely eliminated based on your filing status and income.

Here are the 2018 income phase-out ranges for investors who own a Traditional IRA:

  • For single taxpayers who are covered by a workplace retirement plan, the 2018 phase-out range is $63,000 to $73,000. That is up from $62,000 to $72,000 in 2017.
  • For married couples who file jointly -- where the spouse making the IRA contribution is covered by a workplace retirement plan -- the phase-out range is $101,000 to $121,000. That is up from 2017’s level of $99,000 to $119,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $189,000 and $199,000. That has risen from 2017’s range of $186,000 to $196,000.
  • The phase-out range for a married individual filing a separate return who is covered by a workplace retirement plan remains $0 to $10,000.

Here are the 2018 income phase-out ranges for investors who own a Roth IRA:

  • The income phase-out range for singles and heads of household is $120,000 to $135,000. That is up from $118,000 to $133,000 in 2017.
  • For married couples filing jointly, the income phase-out range will be $189,000 to $199,000, which is up from $186,000 to $196,000 in 2017.
  • The Roth IRA contribution phase-out range for a married individual filing a separate return remains $0 to $10,000.

Although IRA contributions limits have not changed in five years, it is still important to consider making yearly contributions to your retirement account. Holdings in a Traditional IRA can compound year-after-year on a tax-deferred basis and can grow that way until required minimum distributions must start when an account holder turns 70½. This compounding can potentially help a small retirement nest egg grow into a large one.  We encourage you to speak with your tax or financial advisor to see if contributing an IRA is right for you.

To get a full list of IRA contribution limits, you can visit PENSCO’s IRA contribution limits and deadlines page.

 

This Blog does not provide investment, tax, or legal advice nor does it evaluate, recommend or endorse any advisory firm or investment vehicle. Investments are not FDIC insured and are subject to risk, including the loss of principal.

PENSCO Trust Company performs the duties of an independent custodian of assets for self-directed individual and business retirement accounts and does not provide investment advice, sell investments or offer any tax or legal advice. Clients or potential clients are advised to perform their own due diligence in choosing any investment opportunity as well as selecting any professional to assist them with an investment opportunity. Alternative investments are not FDIC insured and are subject to risk, including loss of principal. PENSCO is indirectly affiliated with a registered broker dealer and with a licensed small business investment company through Opus Bank (“Opus Affiliates”). Other than the Opus Affiliates, PENSCO is not affiliated with any financial professional, investment, investment sponsor, or investment, tax or legal advisor.