The IRS announced on October 18th that an increase to traditional and Roth IRA contribution limits would take place for 2013.
The new 2013 traditional and Roth IRA contribution limit will increase by $500, which means that you can save $5,500 in your IRA next year. If you’re age 50 or older, you can save an additional $1,000 totaling $6,500. You can find the IRS announcement here.
2013 Traditional and Roth IRA Contribution Limits
2013 IRA Contribution Limit: $5,500
2013 IRA Catch-up Contributions (Over 50): $1,000
Remember, you can make a ‘catch-up’ contribution to your IRA anytime in the year you turn 50, even if your birthday is on December 31.
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2013 Roth IRA Income Limits
Can I Contribute to a Roth IRA?
The IRS actually sets income limits for Roth IRA contributions, so if you make more than the AGI phase out range, you cannot contribute to a Roth IRA.
The good news for 2013 is that the cost of living adjustments also affected the income limits for IRAs. The AGI phase-out range for the Roth IRA has been increased and they are listed below.
You can max out Roth IRA contributions in 2013 if you are:
- Married filing jointly and your income is less than $178,000 (up from $173,000 in 2012)
- Single head of household and your income is less than 112,000 (up from 110,000 in 2012).
- Married filing separately and your income is $0.
You cannot make a Roth IRA contribution if you are:
- Married filing jointly and your income is more than $188,000 (up from $183,000 in 2012)
- Single head of household and your income is more than $127,000 (up from $125,000 in 2012)
- Married filing separately and your income is more than $10,000.
Common IRA Questions
Can You Contribute to Roth and Traditional IRA?
A lot of people wonder if they can have both a traditional and Roth IRA. The answer is yes, but you must meet the income limits in order to have a Roth IRA. Also, the annual 2013 limit of $5,500 ($6,500 – over 50) is the max you can contribute to your IRAs in total. In other words, if you have a traditional and Roth IRA, the total contribution to both of these accounts cannot exceed a total of $5,500 ($6,500 – over 50) in 2013.
How much can I put in a Roth IRA?
Again, the IRS sets income limits for Roth IRA participation, so if you make over the limits (see above) then you will not be able to contribute to a Roth IRA. The IRS AGI phase out is detailed in IRS publication 590.
Can you contribute to an IRA and 401k?
Yes, you can still contribute to a traditional or Roth IRA even if you are saving in your company 401(k) plan. The only thing that may be affected is how much you can deduct from a traditional IRA. The 401(k) and IRA contribution limits are separate and do not affect each other.
Where Should I Open a Traditional or Roth IRA in 2013?
If you are looking to open an IRA in 2013, consider opening an account at Betterment. I’ve been using Betterment for over a year now and they make it really simple to invest. The automatic deposits and easy to understand investments options are just a couple of features that make it a great account.
Also, you can get $25 just for opening your account with $250! That’s a 10% return on your investment right away. You can read more in our Betterment review.
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