You need to make your Traditional and Roth IRA contributions by the individual tax-filing deadline.
Total annual contributions to a Traditional IRA, Roth IRA, or both cannot be more than the annual maximum for your age or 100% of earned income, whichever is less.
2020 and 2021 tax year maximum annual contribution:
- $6,000 if you’re younger than 50
- $7,000 if you’re 50 or older within a particular tax year
Open the Traditional IRA section (below) for information on the deductibility of your contribution and the Roth IRA section (below) for information on contribution limits.
It is generally a good idea to maximize your IRA contribution to potentially gain the full benefit of tax-advantaged savings and increase your retirement assets.
At Wells Fargo Advisors, you can make contributions to your IRA online or using your mobile device1. A contribution received between January 1 and the tax-filing deadline must indicate whether it is for the current year or prior tax year. If no year is indicated, it is considered a current-year contribution.
A Traditional IRA offers tax-deferred growth potential. You pay no taxes on any investment earnings until you withdraw, or “distribute,” the money from your account, presumably in retirement.2
You can contribute to a Traditional IRA regardless of your age, as long as you, or you spouse, if filing jointly, have earned income, but your contribution may not be fully deductible. Your ability to deduct contributions generally depends on your participation in a workplace retirement plan (WRP)3 and your income.
- If you and your spouse, are not covered4 by a WRP for any part of the year, you can fully deduct the amount of the Traditional IRA contribution you are eligible to make.
- If you are covered4 by a WRP, deductions are phased out based upon Modified Adjusted Gross Income (MAGI) limits below:
Filing status: Single
MAGI | Allowable Deduction |
---|
2020 | 2021 | |
---|
$65,000 or less | $66,000 or less | Full deduction |
Between $65,000 and $75,000 | Between $66,000 and $76,000 | Partial deduction |
$75,000 or more | $76,000 or more | No deduction |
Filing status: Married filing jointly – You and/or your spouse are covered4 by a WRP
MAGI | Allowable Deduction |
---|
2020 | 2021 | |
---|
$104,000 or less | $105,000 or less | Full deduction |
Between $104,000 and $124,000 | Between $105,000 and $125,000 | Partial deduction |
$124,000 or more | $125,000 or more | No deduction |
Filing status: Married filing jointly – Your spouse is covered4 by a WRP, but you are not
MAGI | Allowable Deduction |
---|
2020 | 2021 | |
---|
$196,000 or less | $198,000 or less | Full deduction |
Between $196,000 and $206,000 | Between $198,000 and $208,000 | Partial deduction |
$206,000 or more | $208,000 or more | No deduction |
Filing status: Married filing separately5 – Your spouse is covered4 by a WRP, but you are not
MAGI | Allowable Deduction |
---|
2020 | 2021 | |
---|
$10,000 or less | $10,000 or less | Partial deduction |
$10,000 or more | $10,000 or more | No deduction |
A Roth IRA offers tax-free growth potential. You are eligible to contribute to a Roth IRA at any age as long as you or your spouse, if filing jointly, have earned income and your modified adjusted gross income (MAGI) is at or below the phase-out limits shown below.
Roth IRA contribution phase out limits:
Filing status: Single
MAGI | Allowable Contribution |
---|
2020 | 2021 | |
---|
$124,000 or less | $125,000 or less | Full contribution |
Between $124,000 and $139,000 | Between $125,000 and $140,000 | Partial contribution |
$139,000 or more | $140,000 or more | No contribution |
Filing status: Married filing jointly
MAGI | Allowable Contribution |
---|
2020 | 2021 | |
---|
$196,000 or less | $198,000 or less | Full contribution |
Between $196,000 and $206,000 | Between $198,000 and $208,000 | Partial contribution |
$206,000 or more | $208,000 or more | No contribution |
Filing status: Married filing separately5
MAGI | Allowable Contribution |
---|
2020 | 2021 | |
---|
$10,000 or less | $10,000 or less | Partial contribution |
$10,000 or more | $10,000 or more | No contribution |
Since contributions to a Roth IRA are made with after-tax dollars, there is no tax deduction, regardless of your income. Qualified distributions, which are tax-free and not included in gross income, occur when your account has been open for more than five years and any one of the following applies2:
- You are at least age 59½.
- You are disabled.
- You are using the first-time homebuyer exception.
- The payment is made to your beneficiary after your death.
You do not have to take required minimum distributions (RMDs) from a Roth IRA during your lifetime, optimizing the opportunity to build tax-free wealth.