Roth IRA Contribution Limits for 2022

The IRS limits how much you can contribute to your Individual Retirement Account (IRA) each year. In general, investors under the age of 50 may contribute up to $6,000 to a Roth or traditional IRA during the 2021 and 2022 tax years. Investors over the age of 50 are afforded an annual catch-up contribution of $1,000, making their yearly contribution limit $7,000. However, unlike traditional IRAs, the Roth IRA is subject to an annual income limit and other factors that may impact the amount you can contribute or your ability to contribute at all. Knowing your contribution limit is important, as you can incur penalties if you contribute more to your Roth IRA than is allowed based on your income and filing status. Currently, the IRS charges a 6% excise tax for every year a contribution that exceeds the limit stays in your account.

In this article, we’ll cover:

• Contribution limit factors
• Roth IRA contributions by filing status
• How to calculate your contribution limit

Factors that affect your Roth IRA contribution limit

Things like age, annual income, tax filing status, and contributions to other IRA accounts you’ve made during the same tax year will affect your Roth IRA contribution limit. 

• Age: Anyone earning a taxable income is eligible to contribute to a Roth IRA, regardless of age. Investors under the age of 50 may contribute up to the annual limit, and investors over 50 may put in an additional $1,000 catch-up contribution each year. 
• Modified adjusted gross income: Your modified adjusted gross income (MAGI) is your total gross earned income minus some specific deductions. If your MAGI is less than $129,000 and you meet certain IRS filing status requirements, you can contribute up to the annual limit to your Roth IRA. Higher or lower MAGIs, in conjunction with tax filing status, may reduce or zero out the amount you’re allowed to contribute.
• Filing status: If you are single or married and filing jointly and you are within the modified adjusted gross income limits, you may contribute up to the annual limit for your Roth IRA. Some other filing statuses may reduce or zero out the amount you’re allowed to contribute, depending on your MAGI. 
• Traditional IRA contributions: While you are permitted to have both a traditional IRA and a Roth IRA simultaneously, your combined annual contribution is limited to $6,000, or $7,000 if you’re over age 50. If you have 401(k), it will not affect your ability to contribute to your Roth IRA. 

Calculating your modified adjusted gross income

Calculating your modified adjusted gross income may seem a little complicated, so here’s a quick rundown. First, you should calculate your annual adjusted gross income (AGI). Your AGI encompasses all the income you earned during the year, including wages, tips, royalties, alimony, retirement income, business income, interest, capital gains, and dividends, minus certain tax-deductible expenses. Once you’ve calculated all of your earnings for the year, you will subtract applicable business expenses, retirement plan contributions, student loan interest payments, educator expenses, HSA contributions, and other allowed deductions. This is your AGI. 

To calculate your MAGI, start with your AGI, then add back the deductions specific to your situation outlined by the IRS. The IRS provides a handy worksheet for calculating your MAGI; you’ll need info from your tax documents to fill it out.

Roth contribution limits by filing status for 2022 

Your tax filing status may impact your annual Roth IRA contribution limits. Your contribution limit for 2022 will not exceed $6,000 if you’re under the age of 50, but it could be reduced depending on the filing status you use when filing your taxes. 

Single or head of household

If you’re not legally married, you can choose single filing status. If you meet certain conditions, however, you may also choose to file your taxes as head of household. To claim head of household status, you must be legally single or living apart from your spouse for the last six months of the year, pay more than half of household expenses, and have either a qualified dependent living with you for at least half the year or a parent for whom you pay more than half their living arrangements. 

If you fall into one of these filing statuses and make less than $129,000 annually, you may contribute up to the limit for Roth IRAs. Investors making more than $129,000 but less than $144,000 qualify for a reduced contribution. Single filers making more than $144,000 annually are not allowed to contribute to a Roth IRA. 

Married and filing jointly

Filing jointly means that you and your spouse file a single tax return that includes all income and deductions for both people. If your joint MAGI is less than $204,000, you may each contribute up to the limit for Roth IRAs. Your contribution limit will be reduced if your joint MAGI falls between $204,000-$214,000. Neither of you will be eligible to contribute if your joint MAGI exceeds $214,000 annually. Note that the same rule applies to qualifying widows(ers). 

Married and filing separately

If you’re married filing separately, you and your spouse each file your own tax return, separating your income and deductions. In this case, your contribution limit will be reduced, and you won’t b able to contribute at all if your MAGI is over $10,000.

How to calculate your reduced Roth IRA contribution

If you’ve determined that your MAGI exceeds the standard income threshold, you can calculate your reduced Roth IRA contribution limit according to your tax filing status. There are calculators available online, or you can use the formula provided by the IRS.

1. Start with your modified AGI.
2. Subtract from the amount in (1):
   • $204,000 if filing a joint return or qualifying widow(er),
   • $0 if married filing a separate return, and you lived with your spouse at any time during the year, or
   • $129,000 for all other individuals.    
3. Divide the result in (2) by $15,000 ($10,000 if filing a joint return, qualifying widow(er), or married filing a separate return and you lived with your spouse at any time during the year).
4. Multiply the maximum contribution limit (before reduction by this adjustment and before reduction for any contributions to traditional IRAs) by the result in (3).
5. Subtract the result in (4) from the maximum contribution limit before this reduction. The result is your reduced contribution limit.

For example, if your MAGI is $143,000 and you’re a single filer under the age of 50, your calculation would look like this:

1. 2022 MAGI: $143,000
2. $143,000 – $129,000 = $14,000
3. $14,000 ÷ $15,000 = 0.9
4. 0.9 x $6,000 = $5,400
5. $6,000 – $5,400 = $600

In this example, your annual contribution limit would be reduced to $600.

It’s never too early to make retirement plans

Whether you choose a Roth IRA, a traditional IRA, a 401(k), or another type of retirement savings account, it’s never too early to start investing. And remember, you don’t have to choose just one kind of retirement plan; you can have more than one IRA, as well as a 401(k).  Factors like inflation and penalties for early withdrawal may affect your retirement account balances over the years, so it’s wise to research all your options. Stash can help you prepare for retirement your way with both Roth and traditional IRA investment options.

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