2016 IRA Contribution LimitsJanuary 28, 2016
Modified adjusted gross income (MAGI) limits have changed for 2016.
The annual Individual Retirement Account (IRA) limit is adjusted based on inflation every year, typically increasing only in $500 increments. The contribution limits have not increased since 2013, and it looks like they will remain the same for at least another year. What has changed for this year are the modified adjusted gross income (MAGI) phase-out ranges which limit a taxpayer’s ability to deduct traditional IRA contributions or to contribute to a Roth IRA. This means that some taxpayers might still have a chance to take advantage of IRA tax benefits in 2016.
What is the annual IRA contribution limit for 2016?
As mentioned above, the annual IRA contribution limit has remained stagnant since 2013, remaining at $5,500 for 2016, with an additional “catch-up” contribution limit of $1,000 (only available for taxpayers age 50 and above).
Deduction phase-outs for 2016
If you or your spouse participate in an employer-sponsored retirement plan, these MAGI phase-out ranges allow you to deduct contributions. If you fall within the following ranges, you can deduct a partial contribution but if not, you cannot deduct an IRA contribution.
|Married filing jointly: a spouse who participates in an employer-sponsored plan||$98,000-$118,000||$98,000-$118,000|
|Married filing jointly: a spouse who does not participate in an employer sponsored plan||$183,000-$193,000||$184,000-$194,000|
|Single or head of household who does participate in an employer sponsored plan||$61,000-$71,000||$61,000-$71,000|
For Roth IRAs, if your MAGI falls within the applicable range, you can make a partial contribution, but if it exceeds the top of the range, you are not permitted to make a contribution.
|Married filing jointly||$183,000-$193,000||$184,000-$194,000|
|Single or head of household||$116,000-$131,000||$117,000-$132,000|
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