IRA Contribution Limits for 2022

IRAs are one of the best and simplest ways to save for retirement—anyone can open one at their preferred financial institution, unlike with 401(k)s and other plans that must be sponsored by an employer.

However, because IRAs come with tax savings—and Uncle Sam’s generosity is finite—there are limits to how much you can contribute to an IRA each year. You can contribute $6,000 of earned income, or money you’re paid by an employer or business that you run, each year. If you’re age 50 or older, that limit rises to $7,000.[1]

The IRS increases that limit every so often, but this year it remained the same as it has been every year since 2019.[1]

In addition to the annual limit, IRAs have limitations around income. Here’s a closer look at those rules for both traditional and Roth IRAs, as well as other options for saving for retirement.

Anyone can contribute to a traditional IRA, but the amount of contributions that you can deduct from your taxable income will depend on how much you earn, your marital status and whether you (or your spouse) has access to a retirement plan at work.

For instance, if you or your spouse were covered by a retirement plan at work, the deduction may start to phase out, meaning you could only deduct a reduced amount from your taxable income. If neither the taxpayer or spouse is covered by a retirement plan at work, the phaseouts don’t apply.[2]

This chart can help you understand whether you can deduct the full amount of your contributions up to the annual limit, a partial amount or no contributions at all. Each of these amounts increased by several thousand dollars from the 2021 limits.[2, 3]

With Roth IRAs, income limits apply to how much you can contribute rather than to tax deductions on contributions since you can only contribute to a Roth with after-tax dollars. As your income increases, the amount you can contribute to a Roth IRA decreases, until you eventually reach a threshold where you won’t be able to contribute anything at all.

Here’s how the contribution limits work. Each of these amounts increased by several thousand dollars from the 2021 limits.[3,4]

There’s no way around it: The annual limits on IRA contributions are much lower than the annual limits for 401(k) plans, which have a limit of $20,500 per year, or $27,000 per year if you’re over age 50 in 2022.[6]

If you don’t have access to a retirement plan through your job, you may be wondering whether maxing out an IRA every year will leave you with enough of a nest egg to retire comfortably.

“Saving the IRA maximum each year is certainly better than not saving at all, but for most people, it is not enough for the kind of retirement they want,” says Michelle Gessner, a Certified Financial Planner and the founder of Gessner Wealth Strategies.

“If you are earning $100,000 per year, then saving to the IRS limit means saving only 6% or 7% of your income,” she says. “If you started saving early, you have the money properly invested, and you spend conservatively in retirement, it could be enough, but there are a lot of ‘ifs’ here, and we have not even mentioned the unforeseen events that life brings, such as a job loss or significant tax increase in retirement.”

She recommends saving at least 10% to 15% of your income for retirement, or even 20% if it’s possible for you.

So if you’re earning more than $60,000 per year or so, you’ll need to start looking elsewhere for places to save for retirement to get to that 10% or more.

Here are some ideas for other accounts where you can sock away money for retirement once you max out your IRA.

Retirement plans for the self-employed

If you are self-employed, own a business or have a side hustle, there are several great options for saving for retirement. As a bonus, many of them have higher limits than even 401(k) plans.

SEP IRAs

These vehicles allow you to contribute up to 25% of your compensation, up to a limit of $61,000 in 2022.[7]

Solo 401(k) Plans

Solo 401(k)s allow employee deferral of up to $20,500 (or $27,000 if you’re age 50 or older), plus an employer match up to 25% of compensation.[8] (If you’re the only employee of your business, you play the role of both the employer and the employee.)

Simple IRAs

These plans allow an employee contribution of up to $14,000 ($17,000 if you’re age 50 or older), plus a match of 3% of the employee’s contribution.[9]

Spousal IRAs

In order to contribute to an IRA, you must have earned income. So what does that mean for married couples where one spouse does not work? Both will need money to live on in retirement, regardless of their employment status now.

Spousal IRAs exist to address just this situation. A spousal IRA allows the working spouse to contribute money on behalf of their partner who doesn’t work. That means they can save up to $6,000 for each spouse per year (or $7,000 per over-age-50 spouse per year). The only possible catch is that the total contribution must be less than the working spouse’s total earned income.[1]

“This is a great option for parents who may be focused on taking care of their young kids during the pandemic, for example,” says Matt Bacon, a Certified Financial Planner and lead financial planner at Carmichael Hill & Associates. The nonworking spouse who stays home can still save for retirement by using a spousal IRA.

“Couples looking to top up their savings with one spouse already retired are good candidates, too,” adds Bacon.

Taxable investment accounts

If the above alternative options don’t work for you, you can always invest for the future in a taxable investment account, often known as a brokerage account.

Taxable accounts lack the tax advantages of retirement plans, but they have the advantage of a much wider set of investing options. In a taxable account, you’ll be able to choose from many different stocks, bonds, mutual funds, ETFs and more. These accounts also lack IRA age requirements and other restrictions around withdrawing the money.