Tax Considerations

IRAs are great because by contributing to them you're saving for your retirement in a way that can decrease your taxable income! That being said, it's important to remember that there are limitations to how much you can contribute on an annual basis to your IRAs. The annual contribution limitations are outlined for each IRA type below.

Traditional IRA
In 2018 the annual contribution limit has been set at $5,500 (or $6,500 if you’re over 50).

In 2019, the annual contribution room is set at $6,000 (or $7,000 if you're over 50).

In 2020, the annual contribution room is set at again at $6,000 (or $7,000 if you're over 50).

Roth IRA
The maximum yearly contribution is the same as a Traditional IRA which is set at $5,500 for 2018; $6,500 if you’re 50 or over. The maximum for 2019 is $6,000, or $7,000 if you're over 50. In 2020, the maximum is set again at $6,000, or $7,000 if you're over 50.

Unlike a Traditional IRA, contributions aren’t tax deductible now. Instead, the withdrawals are tax-free later. One thing to consider is that unlike a traditional IRA, not everyone is eligible for a Roth, which you can read more about at the link provided!

SEP IRA
The SEP maxes out at $54,000 per year, or 25% of your income, whichever is lower. SEP IRAs are available for those who are either Self-Employed or work for a small business!

Learn more on Traditional IRAs, Roth IRAs, and SEP IRAs!