Roth IRA Income Limits for 2016

Retirement's Easy Button is Here...

Save time and money with IraSuccess’s new 28 page book

The Only Book You’ll Need to Finance Your Retirement

image for landing page suze orman150 image for landing page ric edelman150 image for landing page charles schwab150 image for landing page Ernie J Zelinski150 image for landing page emily birken150

Save time…Click Here to find out more

This article covers 2016 Roth IRA income limits for contributions. For 2015, see the article 2015 Roth rules.

As it turns out, 2016 is a big year for IRAs because of a current rule that allows for rollovers from traditional IRAs to the more desirable Roth IRAs. For this reason, it is important to know the difference between your Roth IRA contribution limits as opposed to traditional IRA limits. See the above link for slightly different rules that apply to 2016. Just as a reminder, the difference between traditional and Roth IRAs is whether you are contributing pre-tax dollars or after-tax dollars.

Income limits are important for the very reason that give Roth IRAs their advantage over traditional accounts. In both cases, the IRA is meant to help individuals save for retirement by conferring special tax benefits. In a traditional IRA, an individual under 50 can withdraw up to the contribution limit of five thousand five hundred dollars from his or her yearly income, in effect counting as a tax-deductible contribution. This means the individual is only taxed on the income leftover after funding the IRA. When it comes time to take distributions, the distributions will be taxed at ordinary income (which isn’t so great).

In contrast, the Roth is a much better choice for most investors. However, there are two types of Roth rules that restrict the usage of this great benefit: Roth IRA contribution limits and income limits.

The maximum Roth IRA contribution limit for 2016 is the same as for the traditional IRA. This means five thousand five hundred dollars for an individual under the age of fifty and six thousand five hundred dollars for an individual over the age of 50. Take note, these are completely different than SEP limits. In addition, there is an income limit that starts to phase out an individual’s ability to contribute anything to this tax-free retirement vehicle. The government is only interested in helping taxpayers without a high income to provide for their own retirement by saving and investing in a Roth IRA. Instead of letting the rich take advantage of this, the government has set an income limit.

Roth IRA income limits for 2016

For single filers, once your modified AGI (adjusted gross income) has hit one hundred and seventeen thousand dollars, the amount they can contribute to a Roth individual retirement account is slowly phased out until your income reaches one hundred and thirty-two thousand dollars.

For those who are married and filing jointly, the range is between one hundred eighty-four thousand and one hundred ninety-four thousand dollars. This means that if their yearly income is below either minimum threshold, they may contribute up to the full amount, but by the time they’ve hit the maximum threshold, they are no longer eligible to contribute any income that year.

If you are married and filing separately, the outlook is less than rosy. Your AGI must equal zero dollars in order to make the maximum Roth contribution, and the phase out range only goes to a ten thousand dollar ceiling.

Your Tax Filing Status Is  Your Income
Modified Gross Adjusted

Roth Rules

Single, head of household, or married filing separately and you and your partner did not live together.

Less than $117,000

Contribute up to the maximum.

From $117,000 to less than $132,000

Phased out contributions

$132,000 or more

Ineligible for Roth IRA Contributions

Married filing jointly

Less than $184,000

Contribute up to the maximum.

From $184,000 to less than $194,000

Your contribution starts to phase out.

$194,000 or more

Ineligible for Roth IRA contributions.

Married filing separately and you lived with your partner at least some of the year


Contribute up to the maximum.

Between $0 and $10,000

Phased out contributions.

Above $10,000


Print Friendly, PDF & Email