In 2013, the IRA contribution limit increased from $5,000 to $5,500. This is the first contribution limit increase since 2008. For the years 2008 through 2012, IRA contributions were capped at $5,000.
IRA contribution limits increase in increments of $500 and reviewed on an annual basis. The new $5,500 contribution limited applies to both Traditional IRAs and Roth IRAs. An individuals contributions to both types of IRAs cannot contribute the $5,500 sum however. For example, if $3,000 is contributed to a Roth IRA, an individual’s contribution to a Traditional IRA would be capped at $5,500.
It’s still unknown what the 2014 contribution limit will be. Contribution limits tend to increase approximately every four years, so we may not see the IRA contribution limit increase to $6,000 until 2016. Only time will tell.
To read more about the IRA contribution limit announcement and other provision such as the limit for 401(k), please see IR-2012-77. Taxpayers can also contribute $17,500 to their 401(k) in 2013.