How Much Can I Contribute to My Account? (2025) – American Estate & Trust

Understanding the annual contribution limits for Individual Retirement Accounts (IRAs) is essential for effective retirement planning. These limits, set by the Internal Revenue Service (IRS), vary based on factors such as the type of IRA and your age. Below is a comprehensive guide to help you determine how much you can contribute to your IRA for the year 2025.

Traditional and Roth IRA Contribution Limits for 2025

For the year 2025, the maximum contribution limits for both Traditional and Roth IRAs are as follows:

Under Age 50: You can contribute up to $7,000.
Age 50 and Over: You are eligible for an additional "catch-up" contribution of $1,000, bringing your total allowable contribution to $8,000.

It's important to note that these limits apply collectively to all your IRAs. For example, if you're under 50 and contribute $4,000 to a Traditional IRA, you can only contribute up to $3,000 to a Roth IRA within the same year.

Income Limits for Roth IRA Contributions

Your eligibility to contribute to a Roth IRA is influenced by your Modified Adjusted Gross Income (MAGI) and tax filing status. For 2025, the contribution limits are phased out as follows:

Married Filing Jointly: The phase-out range is between $236,000 and $246,000. If your MAGI exceeds $246,000, you cannot contribute to a Roth IRA.
Single Filers and Heads of Household: The phase-out range is between $150,000 and $165,000. Contributions are not permitted if your MAGI is $165,000 or more.
Married Filing Separately: The phase-out range is between $0 and $10,000. If your MAGI is $10,000 or more, you cannot contribute to a Roth IRA.

If your income falls within these ranges, the amount you can contribute is reduced proportionally. Those with MAGI below the phase-out range can contribute the full amount.

Examples

Single Filer Under 50 with MAGI of $140,000:
- Traditional IRA: Can contribute up to $7,000.
- Roth IRA: Eligible to contribute up to the full $7,000, as the MAGI is below the phase-out range.
Married Couple Both Over 50, Filing Jointly with MAGI of $240,000:
- Traditional IRA: Each spouse can contribute up to $8,000.
- Roth IRA: Contributions are partially reduced due to the MAGI falling within the phase-out range.

Key Considerations

Earned Income Requirement: You must have taxable compensation to contribute to an IRA.
Contribution Deadline: Contributions for a given tax year must be made by the tax filing deadline of the following year, typically April 15.
Excess Contributions: Contributing more than the allowed limit can result in a 6% tax on the excess amount each year until corrected.

For more detailed information, please consult the IRS’s official publications on IRA contributions: IRS IRA Contribution Limits

By staying informed about these limits and guidelines, you can make the most of your retirement savings opportunities while adhering to IRS regulations.