IRA income limits for 2018

Overview

ROTH IRA and traditional IRA account contributions are subject to income phaseout limits.  In the case of the ROTH IRA the limits are related to eligibility and in the case of a traditional IRA the limits are related to deducting the contributions.  If you exceed these limits you may want to consider alternatives for deferring taxes on your retirement savings.  There are many options available depending upon your particular situation.  In general, business owners and self employed individuals have more options available to them than do W-2 employees.  The details of the income and phaseout limits are discussed in detail below.

ROTH IRA income limits

You are typically able to make a ROTH IRA contribution if your income falls below certain levels.  If you are married filing jointly, you can make a full ROTH IRA contribution if your modified adjusted gross income (MAGI) is less than $189,000 for the 2018 tax year.  You can make a reduced contribution if your MAGI is between $189,000 and $199,000, and contributions are disallowed altogether if your MAGI is greater than or equal to $199,000.

If your tax filing status is single or head of household you may make a full ROTH IRA contribution for the 2018 tax year if your MAGI is less than $120,000,  a reduced contribution if your MAGI is between $120,000 and $135,000, and no contribution at all if your MAGI is greater than or equal to $135,000.

If you are not able to make a ROTH IRA contribution due to income restrictions, you may want to investigate whether or not your employer offers a ROTH 401K plan.  If they do not, you should consider making a request to your employer that a ROTH 401K plan be implemented.

ROTH IRA income limits for 2018 tax year
filing status income limit
Married filing jointly full contribution allowed for MAGI less than $189,000; phaseout for MAGI between $189,000 and $199,000, no contribution allowed for MAGI greater than or equal to $199,000
Single full contribution allowed for MAGI less than $120,000; phaseout for MAGI between $120,000 and $135,000, no contribution for MAGI greater than or equal to $135,000
Head of household full contribution allowed for MAGI less than $120,000; phaseout for MAGI between $120,000 and $135,000, no contribution for MAGI greater than or equal to $135,000
Married filing jointly (and lived with spouse at any time during year) phaseout for MAGI between $0 and $10,000, no contribution for AGI greater than or equal to $10,000

Traditional IRA income limits

There are no income restrictions related to making a contribution to a traditional IRA, however you may not be able to deduct the contributions if you or your spouse participates in a retirement plan at work.  If you or your spouse participate in a retirement plan at work, the deduction begins to phaseout at $63,000 MAGI for single or head of household ($101,000 for married filing jointly) and phases out completely at $73,000 MAGI ($121,000 for married filing jointly).  These numbers are for the 2017 tax year.  If you are in this situation, you should consider contributing to your retirement plan at work, such as a 401K plan, as you will be able to deduct these contributions up to their limit.

Traditional IRA income limits for 2018 tax year
filing status no retirement plan at work retirement plan at work spouse has retirement plan at work (and you do not)
Married filing jointly no limits full deduction up to contribution limit if MAGI less than $101,000, partial deduction for MAGI between $101,000 and $121,000, no deduction if MAGI is greater than $121,000 full deduction if MAGI less than $189,000, phaseout for MAGI between $189,000 and $199,000, no deduction if MAGI is greater than $199,000
Single no limits full deduction up to contribution limit if MAGI less than $63,000, partial deduction for MAGI between $63,000 and $73,000, no deduction if MAGI is greater than $73,000 N/A
Head of household no limits full deduction up to contribution limit if MAGI less than $63,000, partial deduction for MAGI between $63,000 and $73,000, no deduction if MAGI is greater than $73,000 N/A
Married filing separately no limits partial deduction for MAGI between $0 and $10,000, no deduction if MAGI is greater than or equal to $10,000 partial deduction for MAGI between $0 and $10,000, no deduction if MAGI is greater than or equal to $10,000

2017 tax brackets

Below are the income tax brackets for the 2017 tax year.  These are the marginal tax rates, in that you will be taxed at each of these levels as your income rises.  For example, if you are single and had taxable income of $60,000, your tax would be the sum of 10% of $9,325, 15% of $28,625 ($37,950 minus $9,325), and 25% of $22,050 ($60,000 minus $37,950).  Capital gains tax brackets are different from income tax brackets.

2017 Income tax brackets
Rate Single Filer Married Filing Jointly Head of Household
10% $0 – $9,325 $0 – $18,650 $0 – $13,350
15% $9,326 – $37,950 $18,651 – $75,900 $13,351 – $50,800
25% $37,951 – $91,900 $75,901 – $153,100 $50,801 – $131,200
28% $91,901 – $191,650 $153,101 – $233,350 $131,201 – $212,500
33% $191,651 – $416,700 $233,351 – $416,700 $212,501 – $416,700
35% $416,701 – $418,400 $416,701 – $470,700 $416,701 – $444,500
39.6% >$418,401 >$470,700 >$444,501

A summary of tax filing deadlines for 2017

Below are many of the tax filing deadlines for the 2017 tax year.  Detailed information can be found on the IRS website.

2017 tax filing deadlines
Date items due
March 15 corporate and partnership tax returns are due for 2016 calendar year tax payers
April 18 individual tax returns are due for 2016 tax year; first due date for quarterly estimated taxes
June 15 second due date for quarterly estimated taxes
September 15 due date for 2016 calendar year partnership tax return if extension was filed; third due date for quarterly estimated taxes
October 17 due date for 2016 calendar year corporate and individual tax returns if extension was filed

Retirement plan limits and deadlines for the 2017 tax year

Below is a summary of key retirement plan information for the 2017 tax year.

Retirement plan deadlines and limits for the 2017 tax year
plan type  deadlines contribution limit
Traditional and ROTH IRA plan must be established and contribution must be made by the tax filing deadline, no extensions $5,500, $6,500 if age 50 or older
SEP IRA plan must be established and contribution must be made by the tax filing deadline, including extensions 25% of wage or salary compensation or $54,000, whichever is lesser
SIMPLE IRA new plan must be established by October 1 $12,500, $15,500 if age 50 or older
401K plan plan must be established by the end of the calendar year.  contribution must be made by the tax filing deadline, including extensions $18,000, $24,000 if age 50 or older for employee deferrals, $54,000 for total contributions, including employer contributions
Solo 401K plan plan must be established by the end of the calendar year.  contribution must be made by the tax filing deadline, including extensions $18,000, $24,000 if age 50 or older, plus 25% of compensation, or 20% of self employment income, up to a limit of $54,000, or $60,000 for an individual age 50 or older
Defined benefit pension plan contribution must be made by September 15 for plan with fiscal year ending December 31 of prior year benefit amount can not exceed $215,000 or average of highest 3 years of compensation.  Contribution limit is based upon actuarial computations based upon these benefit limits