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IRA Contribution Limits and Deadlines for 2019 & 2020

Table of Content

Last updated on April 1st, 2020
Written by: Rick Pendykoski

1. Traditional & Roth IRA Contribution and Deadlines

Traditional & Roth IRA Contribution Deadlines

  • Tax-year 2019 deadline is April 15th, 2020
  • Tax-year 2020 deadline is April 15th, 2021

In 2019 and 2020, the annual contribution limit for Roth and traditional IRAs is:

  • Under age 50: $6,000 (up from $5,500 in 2018).
  • Age 50 or older: $7,000 (up from $6,500 in 2018).

Traditional IRA Income Deduction Limits for 2019 and 2020

Filing status 2020
Full deduction if modified AGI is …
2020
Partial deduction if modified AGI is …
2020
No deduction if modified AGI is …
2019
Full deduction if modified AGI is …
2019
Partial deduction if modified AGI is …
2019
No deduction if modified AGI is …
Married filing jointly and you’re covered by retirement plan at work $104,000 or less More than $104,000 but less than $124,000 $124,000 or more $103,000 or less More than $103,000 but less than $123,000 $123,000 or more
Married filing jointly and your spouse is covered by a retirement plan at work $196,000 or less More than $196,000 but less than $206,000 $206,000 or more $193,000 or less More than $193,000 but less than $203,000 $203,000 or more
Single or head of household and you are covered by a retirement plan at work $65,000 or less More than $65,000 but less than $75,000 $75,000 or more $64,000 or less More than $64,000 but less than $74,000 $74,000 or more
Married filing separately and you or your spouse is covered by a retirement plan at work The full deduction isn’t available Less than $10,000 $10,000 or more A full deduction is not available Less than $10,000 $10,000 or more
Single, head of household, qualifying widow(er), married filing jointly or separately and neither spouse is covered by a plan at work Any amount

Roth IRA Income Contribution and Deduction Limits for 2019 and 2020

Filing status 2020
Modified AGI
2020
Maximum Contribution
2019
Modified AGI
2019
Maximum Contribution
Married filing jointly or qualifying widow(er) Less than $196,000 $6,000 ($7,000 if 50 or older) Less than $193,000 $6,000 ($7,000 if 50 or older)
$196,000 to $205,999 Contribution is reduced $193,000 to $202,999 Contribution is reduced
$206,000 or more Not eligible $203,000 or more Not eligible
Single, head of household or married filing separately (if you did not live with spouse during year) Less than $124,000 $6,000 ($7,000 if 50 or older) Less than $122,000 $6,000 ($7,000 if 50 or older)
$124,000 to $138,999 Contribution is reduced $122,000 to $136,999 Contribution is reduced
$139,000 or more Not eligible $137,000 or more Not eligible
Married filing separately (if you lived with spouse at any time during year) Less than $10,000 Contribution is reduced Less than $10,000 Contribution is reduced
$10,000 or more Not eligible $10,000 or more Not eligible

What is “Earned Income”?

IRA contributions are made with “earned income,” which you can get in two ways: either by working for someone or running/owning your own business.
Earned income includes money from salaries, wages, commissions, tips, bonuses, and self-employment income.
Note: IRS considers disability retirement benefits as earned income until you reach the age at which you would have received annuity or pension if you weren’t disabled.

What is Modified AGI?

The modified adjusted gross income (MAGI) determines your eligibility for important tax benefits and whether you can make tax-deductible contributions to IRAs. This MAGI number is likely to be close or identical to your adjusted gross income (AGI). It takes your AGI and adds back certain deductions, including:

  • IRA contributions and Social Security
  • Half of any self-employment taxes
  • Passive income or loss
  • Losses from a publicly traded partnership
  • Rental losses
  • Qualified tuition expenses
  • The exclusion for adoption expenses
  • Student loan interest
  • The exclusion for income from U.S. savings bonds
  • Tuition and fees

Exceptions to IRA contribution limits

  • You cannot contribute more than you earn. For example, if your taxable compensation for the year is $5,000, that’s also your IRA contribution limit.
  • If you’re nonworking and your spouse makes enough money to cover the IRA contributions, you can have spousal IRA. So, if you both are under age 50 and want to contribute the maximum to an IRA, your spouse needs to earn at least $12,000 in 2020 to cover the $6,000 annual maximum contribution for each of you.

Excess IRA contribution

An excess IRA contribution happens in these situations:

  • When you contribute more than the contribution limit.
  • When you make an improper rollover contribution to an IRA.
  • When you make a regular IRA contribution to a traditional IRA at age 70½ or older for 2019, or earlier.

Excess IRA contributions attract a tax of 6% per year for as long as the excessive amount stays in the IRA. However, the tax applied cannot exceed 6% of the combined value of all your IRAs as of the end of the tax year.
You can avoid excess IRA contributions by:

  • Withdrawing the excess contribution (and income earned on the excess contribution) from your IRA before the April tax deadline. But, if you’ve already filed your tax return, withdraw the excess contribution (and income earned on the excess contribution), and file an amended tax return by the October deadline.

 

2. SIMPLE IRA Contributions and Deadlines

SIMPLE IRA Employee Contribution Deadlines

  • Employee contributions (deferrals) are due within 7 business days after the amount is deducted from their pay.

SIMPLE IRA Employer Contribution Deadlines

  • Employer contributions are due by the employer’s tax return date plus extensions.

SIMPLE IRA Employee Contribution Limits

  2019 2020
Employee elective deferrals $13,000 $13,500
 
Catch-up elective deferral contribution for age 50+ $3,000 $3,000

SIMPLE IRA Employer Contribution Limits

The employer can elect from two different contribution methods. The employer can either:

  • Match an employee’s salary reduction contributions on a dollar-for-dollar basis, up to 3% of the employee’s compensation.

OR

  • Make non-elective contributions of 2% of each eligible employee’s contribution.

Lower percentage

An employer may choose to reduce the 3% matching contribution, but under a few conditions:

  • The limit must be at least 1%.
  • The limit is reduced for not more than 2 years out of 5 years.
  • The employer must notify the employees of the reduced match much in advance before the 60-day election period for the calendar year.

Non-elective contributions

If the employer chooses to make non-elective contributions of 2% of each eligible employee’s compensation, it must make non-elective contributions irrespective of whether or not the employee opts to make salary reduction contributions. An employee’s compensation up to $280,000 for 2019 and $285,000 for 2020 is considered while determining the contribution limit.
Important note: The employer can choose to make non-elective contributions of 2% over matching the contribution only if:

  • The employer informs the eligible employees about choosing non-elective contributions of 2% instead of matching the contribution, and
  • This notification is provided within a reasonable period before the 60-day election period for the calendar year.

 

3. SEP IRA Contributions and Deadlines

SEP IRA Deadlines

  • For 2019, Business tax filing deadline, plus extensions
  • For 2020, Business tax filing deadline, plus extensions

SEP IRA Contribution Limits

  2019 2020
Defined contribution maximum deferral
(employer/employee combined)
Up to 25% of compensation, with a maximum of $56,000 Up to 25% of compensation, with a maximum of $57,000
Age 50 Catch-Up Limit $6,000 $6,500

 

4. HSA Contributions and Deadlines

HSA Contribution Deadlines

  • Tax-year 2019 deadline is April 15th, 2020
  • Tax-year 2020 deadline is April 15th, 2021

HSA Contribution Limits

  2019 2020
Maximum limit self-only coverage $3,500 $3,550
Maximum limit family coverage $7,000 $7,100
Age 55 Catch-Up Limit
(If more than 1 person in the Family Plan is over age 55, then an additional account has to be created for making catch-up contribution)
$1,000 $1,000
HDHP (High Deductible Health Plan) minimum annual deductible self-only coverage $1,350 $1,400
HDHP minimum annual deductible
family coverage
$2,700 $2,800
HDHP maximum out of pocket
self-only coverage
$6,750 $6,900
HDHP maximum out of pocket
family coverage
$13,500 $13,800

 

5. ESA Contributions and Deadlines

ESA Contribution Deadlines

  • Tax-year 2018 deadline is April 15th, 2019
  • Tax-year 2019 deadline is April 15th, 2020

ESA Contribution Limits

2019 2020
Per year contribution limit until the child reaches age 18 and unless the child has special needs $2,000 $2,000

 

6. Spousal IRA Contributions and Deadlines

Spousal IRA Contribution Deadlines

  • For 2019, the deadline is April 15, 2020
  • For 2020, the contribution deadline is until April 16, 2021

Spousal IRA Contribution Limits

2019 2020
Individual spouse contribution limit $6,000 $6,000
Catch-up contribution of individual spouse for age 50 or older $1,000 $1,000
Total contribution limit for married couple $12,000 $12,000
Total catch-up contribution for married couple age 50 or older $2,000 $2,000