New Traditional IRA Limits for 2014


Essential Information for 2014. Do you know someone with a traditional IRA? Be sure to bookmark this page for reference. The rules governing your maximum IRA income limits for 2014 vary based on the type of IRA you have, your income and your filing status. It’s important to note that this is not the same thing as your 2014 IRA contribution limits. If you are contributing to multiple accounts, it is best to contact a qualified accountant or investment expert if you think you are close to the limits. This way you might avoid costly mistakes.

Contribution Limits vs. Deduction Limits. The maximum you can contribute to a traditional IRA depends on your age. For the 2014 tax year, the limit is five thousand five hundred dollars for those 49 and younger. If you turn 50 or older in 2014, then your upper limit raises to six thousand five hundred dollars. Check out the 2014 Ultimate IRA Cheat Sheet for more.

For Traditional IRAs, income limits are also known as deduction limits. These refer to the amount of your contribution that can be deducted from your income before taxes are applied. This is different from Roth IRA income limits, which sets a ceiling on the amount you can contribute up front to a Roth IRA account, based on your income. If you happen to exceed the income limits and don’t qualify for a full deduction, you can still contribute to a traditional IRA. The tax consequences differ in this scenario, and you must file a IRS form 8606.

In 2014, traditional IRA income limits changed from previous years. The maximum limits for your traditional IRA is based on you adjusted gross income, or AGI. To further complicate things, the amounts vary depending upon whether or not you are covered by a retirement plan at your job.

Traditional IRA Income Limits for 2014

  • If your filing status is head of household or single, your IRA tax deduction starts to phase out when your AGI reaches $60,000 and completely disappears when you reach $70,000.
  • If you and your partner file are married filing jointly, the IRA deduction begins to phase out when you reach $96,000 and tops out at $116,000. This represents an increase of $1000 from 2013.
  • And if you are married filing separately, apparently the government doesn’t like you because the deduction phases out at less that $10,000 and you get no deduction whatsoever if your AGI exceeds $10,000.

If you are covered by another plan at work for the 2014 tax year, the following income traditional IRA income limits apply.

Your Tax Filing Status Is Your Income
Modified Gross Adjusted

2014 Traditional IRA Limit

Single or head of household

$60,000 or less

Full Deduction

More than $60,000 but less than $70,000

Phased-out deduction

$70,000 or more

No Deduction Allowed

Married filing jointly

$96,000 or less

Full Deduction up to the maximum.

More than $96,000 to less than $116,000

Your deduction starts to phase out.

$116,000 or more

No deduction allowed.

Married filing separately

Less than $10,000

Phased out deduction.

$10,000 or more

No deduction for you!

 

If you are not participating in a retirement plan at your place of employment then the rules governing your traditional IRA income limits change.

  • If you are single or filing as a head of household, no income limits apply.
  • If you are married filing jointly and your spouse also doesn’t participate in an employer based retirement plan, then still no income limits apply.
  • But, if you are married filing jointly and your spouse is covered at work, then your deduction limits start phasing out at an AGI of $181,000 and top out at $191,000.
  • Again, if you are married filing separately, you’re pretty much toast because the deduction limits start out at less than $10,000.
Your Tax Filing Status Is Your Income
Modified Gross Adjusted

2014 Traditional IRA Limit

Single, head of household, or married and your spouse isn’t covered by another work plan

Anything

Full Deduction!

Married filing jointly (spouse participates in a work plan)

$181,000 or less

Full Deduction up to the maximum.

More than $181,000 to less than $191,000

Your deduction starts to phase out.

More than $191,000

No deduction allowed.

Married filing separately (spouse participates in a work plan)

Between $0 and $10,000

Phased out deduction.

Above $10,000

No deduction for you!

 

2013 Traditional IRA Income Limits

For 2013, the IRS increased these limits for most income brackets between two to four thousand dollars.

If you are covered by another plan at work for the 2013 tax year, the following income traditional IRA income limits apply.

Your Tax Filing Status Is Your Income
Modified Gross Adjusted

2013 Traditional IRA Limit

Single or head of household

$59,000 or less

Full Deduction

More than $59,000 to less than $69,000

Phased-out deduction

$69,000 or more

No Deduction Allowed

Married filing jointly

$95,000 or less

Full Deduction up to the maximum.

More than $95,000 to less than $115,000

Your deduction starts to phase out.

$115,000 or more

No deduction allowed.

Married filing separately

Between $0 and $10,000

Phased out deduction.

Above $10,000

No deduction for you!

 

If you are not covered by another plan at work, but your spouse is, use the following table to estimate your income limits. Remember, if neither you or your spouse is covered by another work plan, then you are entitled to the full deduction.

Your Tax Filing Status Is Your Income
Modified Gross Adjusted

2013 Traditional IRA Limit

Single, head of household, or married and your spouse isn’t covered by another work plan

Anything

Full Deduction!

Married filing jointly (spouse participates in a work plan)

$178,000 or less

Full Deduction up to the maximum.

More than $178,000 but less than $188,000

Your deduction starts to phase out.

$188,000 or more

No deduction allowed.

Married filing separately (spouse participates in a work plan)

Between $0 and $10,000

Phased out deduction.

Above $10,000

No deduction for you!

 

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