Last weekend, I was at a friend’s house for dinner and we started talking about saving for retirement. We were discussing the different types of plans we use for our personal retirement savings – 401k, 403b, IRA, and Roth IRA. We knew there were contribution limits for each retirement tool, but we weren’t sure about retirement limits among similar tools. Our question was: can we contribute the maximum amount to a traditional IRA plus the maximum amount to a Roth IRA?
I decided to answer this burning question so I looked it up on the IRS website!
According to the IRS, the contribution limit for IRAs in 2015 is $5,500. It is important to note that this is the limit for most people, but if you are age 50 and over, you are able to contribute more to your retirement account (to determine how much more, consult the IRS website – https://www.irs.gov/Retirement-Plans/COLA-Increases-for-Dollar-Limitations-on-Benefits-and-Contributions).
The IRS website clearly states that you may contribute a total of $5,500 to all your IRA accounts, regardless of if you’re contributing to just one IRA, several IRAs, or a traditional IRA and a Roth IRA (https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits). So, no, you can’t contribute the maximum amount to a traditional IRA plus the maximum amount to a Roth IRA.
That settles that question! 🙂
Fun fact for today: Most people think IRA stands for “Individual Retirement Account”. However, that’s not actually the case. IRA stands for “Individual Retirement Arrangement”. Exciting stuff, huh? 😉 (Source: https://www.irahelp.com/slottreport/what-does-ira-stand-not-what-you-may-think)
Author’s note: There are many different kinds of retirement plans for different circumstances. You can learn more about them here: https://www.irs.gov/Retirement-Plans/Plan-Sponsor/Types-of-Retirement-Plans-1.
Disclaimer: This post is not intended to be retirement or financial advice. Please consult your tax professional regarding your specific circumstances before making any changes to your retirement and other accounts.