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IRA Contribution Limitations: 2023

Like the various plan limitations described in the post below, the limitations that apply to IRA and Roth IRA contributions increased significantly between 2022 and 2023. These changes, too, are found in Notice 2022-55.


The maximum contribution that may be made to an IRA for calendar year 2023 is $6,500 plus an extra $1,000 for taxpayers who are at least 50 years old on December 31, 2023. The 2022 limitations were $6,000 and $7,000. (The $1,000 add-on is not indexed.) That's the simple part. More complicated is figuring out how much of the contribution is deductible. Nondeductible contributions have some benefit: The earnings that they accrue won't be taxed until they are distributed, and the contributions themselves result in tax cost basis, thus precluding double taxation of income.

  • If the taxpayer (and his spouse, if they file a joint return) are not active participants in an employer-sponsored retirement plan, the contribution is fully deductible except to the extent that it exceeds the taxpayer's (or the joint filers') compensation. The details of determining "active participant" status will be left to another post. As an approximation, someone who neither accrues benefit under a qualified defined benefit plan nor has any contributions allocated to an account in a defined contribution plan is not an "active participant". There are, however, exceptions and nuances.

  • Where the taxpayer or his spouse is an active participant, the entire contribution is deductible if doesn't exceed a ceiling based on adjusted gross income (with modifications that are of minor significance for most taxpayers affected by these rules; the most significant is that foreign income excluded by section 911 is added back to AGI). The ceiling depends on filing status:

    • Joint return, IRA owner is an active participant: $116,000, up from $109,000

    • Joint return, IRA owner is not an active participant, but spouse is: $218,000, up from $204,000.

    • Married filing separate return: zero; the maximum deduction is always phased out to some extent and, as will be seen, is almost always nil

    • Other taxpayers (single or head of household): $73,000, up from $68,000

  • The deduction isn't lost entirely just because adjusted AGI exceeds the ceiling for full deductibility. It is phased out at the rate of one percent per $200 of AGI if the IRA owner is an active participant and one percent per $100 in all other cases, always rounded down to the next lower $10. For example, if a single taxpayer under age 50 has adjusted AGI of $78,450, AGI exceeds the $73,000 by 54.5 $100 increments. The maximum deduction is therefore 54.5% phased out, leaving a potential deduction of 45.5% of $6,500, or $2,957.50, which is rounded down to $2,950. The deduction is phased out entirely when adjusted AGI reaches these levels:

    • Joint return, IRA owner is an active participant: $136,000, up from $129,000

    • Joint return, IRA owner is not an active participant, but spouse is: $228,000, up from $214,000.

    • Married filing separate return: $10,000 (no indexing)

    • Other taxpayers (single or head of household): $83,000, up from $78,000

  • The maximum IRA contribution that may be characterized as a Roth contribution (nondeductible, but distributions are fully tax-free, if the requisite conditions are satisfied) depends on filing status and adjusted AGI; active participation in an employer plan makes no difference. The entire contribution may be a Roth IRA contribution if adjusted AGI is no more than –

    • Joint return or qualifying widow or widower: $218,000, up from $204,000

    • Single or head of household: $138,000, up from $129,000

    • Married filing separately: zero

  • The rate of phase out is one percent per $100 for joint filers and qualifying widows and widowers, one percent per $150 for single and head of household filers, and one percent per $100 for married taxpayers filing separately. The ability to make Roth IRA contributions is fully phased out at these AGI levels:

    • Joint return or qualifying widow or widower: $228,000, up from $214,000

    • Single or head of household: $153,000, up from $144,000

    • Married filing separately: $10,000 (no indexing)

The Roth IRA contribution limits are something of a phantom. The owner of a traditional IRA, no matter what his AGI, can convert it into a Roth IRA by recognizing the then-value of the account as taxable income.

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