Are Roth and Traditional IRA Limits Combined? Understanding Your Retirement Contribution Options in 2025

Don’t know how much you can put into your IRA? You’re not the only one! One of the most common questions I get from readers is whether the limits for a Roth and a Traditional IRA are the same or different. The short answer is that they are the same for both types of accounts. But there’s a lot more you need to know to get the most out of your plan to save for retirement.

The Combined IRA Contribution Limit: What You Need to Know

To get right to it, the IRS has set the following limits on how much you can contribute in 2025:

• $7,000 maximum combined contribution for individuals under 50
• $8,000 maximum combined contribution for individuals 50 and older (includes $1,000 catch-up contribution)

If you’re under 50, this means that after putting $3,500 into your Traditional IRA, you can only put another $3,500 into your Roth IRA in the same tax year. The limit is on how much you can put into all of your IRAs together, not just one.

As John, one of the examples from the IRS documentation, demonstrates “John, age 42, has a traditional IRA and a Roth IRA. He can contribute a total of $6,000 to either one or both for 2020.” (Though note this example uses the 2020 limit – the current 2025 limit is higher at $7,000)

Why Does This Matter for Your Retirement Strategy?

It’s important to know these combined limits because they affect how you divide your retirement savings. You don’t have to pick just one type of IRA. You can strategically split your contributions between both types to get the most tax breaks based on your current situation and what you think will happen in the future.

Contributing to Both IRA Types: Is It Allowed?

Absolutely! You can contribute to both a Traditional and Roth IRA in the same year, as long as your total contributions don’t exceed the annual limit. This gives you flexibility to diversify your tax advantages.

For example, a 35-year-old could potentially divide her $7,000 contribution by investing $3,000 in a Traditional IRA for the immediate tax deduction and putting the remaining $4,000 in a Roth IRA for tax-free growth and withdrawals in retirement.

Eligibility Requirements: More Than Just Contribution Limits

Before you start dividing your contributions, you should know there are several factors that determine eligibility:

For Both IRA Types:

• Must have earned income (wages, salaries, tips, bonuses or taxable alimony)
• Passive income like rental income, interest and dividends don’t qualify

For Traditional IRAs:

• No age restrictions (previously had a 70½ age limit, but this was removed)
• Subject to Required Minimum Distributions (RMDs) starting at age 73 (or 75 if born in 1960 or later)
• Deductibility may be limited based on income and workplace retirement plan status

For Roth IRAs:

• Income limits apply – eligibility phases out at higher income levels
• No RMDs during your lifetime

2025 Income Limits: Who Can Contribute What?

Roth IRA Income Limits for 2025

For single filers, heads of households, and married filing separately (not living together):

• Full contribution if MAGI is less than $150,000
• Partial contribution if MAGI is between $150,000 and $165,000
• No contribution if MAGI is $165,000 or higher

For married couples filing jointly:

• Full contribution if MAGI is less than $236,000
• Partial contribution if MAGI is between $236,000 and $246,000
• No contribution if MAGI is $246,000 or higher

Traditional IRA Deduction Limits for 2025

If you’re covered by a workplace retirement plan:

For single or head of household:

• Full deduction if MAGI is $79,000 or less
• Partial deduction if MAGI is between $79,000 and $89,000
• No deduction if MAGI is $89,000 or more

For married filing jointly:

• Full deduction if MAGI is $126,000 or less
• Partial deduction if MAGI is between $126,000 and $146,000
• No deduction if MAGI is $146,000 or more

If you’re not covered by a workplace plan but your spouse is:

• Full deduction if MAGI is $236,000 or less
• Partial deduction if MAGI is between $236,000 and $246,000
• No deduction if MAGI is $246,000 or more

How to Strategically Divide Your IRA Contributions

Now that we understand the rules, let’s talk strategy. How should you split your contributions between Traditional and Roth IRAs? Here are some guidelines:

Consider Current vs. Future Tax Brackets

• Traditional IRA advantage: If you’re currently in a high tax bracket and expect to be in a lower one during retirement, Traditional IRAs offer immediate tax savings.
• Roth IRA advantage: If you anticipate being in a higher tax bracket later, Roth IRAs might be more advantageous since withdrawals will be tax-free.

Tax Bracket Strategy

One smart approach might be contributing to a Traditional IRA up to the point where your taxable income drops to a lower bracket, then directing the rest to a Roth IRA. This gives you both immediate tax savings and future tax-free income.

Diversification Benefits

There’s a saying I like: “Don’t put all your eggs in one basket.” The same applies to tax treatment of retirement funds. Having both pre-tax (Traditional) and after-tax (Roth) retirement savings gives you more flexibility in retirement.

Real-World Examples: How People Split Their Contributions

Let’s look at some examples of how different people might divide their IRA contributions:

Example 1: Sarah and Mike
Sarah (50) and Mike (48) reported joint taxable income of $60,000. Sarah has no earned income, but Mike does. Sarah can contribute $8,000 to her IRA ($7,000 plus $1,000 catch-up), while Mike can contribute $7,000 to his own IRA.

Example 2: Danny
Danny, an unmarried college student, earned $3,500 in a part-time job. He can only contribute $3,500 to his IRA – the amount of his actual earned income, even though the limit is higher.

Example 3: Mixed Strategy
A 45-year-old in the 24% tax bracket might put $4,000 in a Traditional IRA for the immediate tax deduction (saving $960 in taxes) and the remaining $3,000 in a Roth IRA for tax-free growth.

Common Mistakes to Avoid

1. Overcontributing: Contributing more than the annual limit can result in a 6% excess contribution tax for each year the excess remains in the account.

2. Missing income thresholds: Not checking if you’re eligible for Roth contributions or Traditional IRA deductions based on your income.

3. Forgetting the deadline: You have until Tax Day (usually April 15) of the following year to make IRA contributions for the previous tax year.

What Happens If You Contribute Too Much?

If you exceed your combined contribution limit, you’ll face a 6% penalty tax on the excess amount each year it remains in your account. To avoid this:

• Withdraw the excess contributions (and any earnings on them) by your tax filing deadline
• Apply the excess to next year’s contribution (though you’ll still pay the penalty for the current year)

Making the Most of Your IRA Contributions

Here are some practical tips for optimizing your IRA strategy:

• Track your contributions carefully throughout the year
• Consider automating your contributions monthly instead of waiting until the tax deadline
• Reassess your strategy annually based on income changes and tax situation
• Remember the contribution deadline – you have until Tax Day (April 15, 2026) to make 2025 contributions

The Backdoor Roth Option for High Earners

If your income exceeds the Roth IRA limits, you might still be able to contribute through what’s called a “backdoor Roth IRA.” This involves:

1. Contributing to a Traditional IRA (which has no income limits)
2. Converting that contribution to a Roth IRA

This strategy can be complex from a tax perspective, especially if you already have other Traditional IRA funds, so consulting with a financial advisor is recommended.

Final Thoughts: Which IRA Should You Prioritize?

There’s no one-size-fits-all answer to whether you should prioritize Traditional or Roth IRAs. The best approach depends on your unique situation:

• Young workers in lower tax brackets might benefit more from Roth contributions
• Peak earners in high tax brackets might favor Traditional IRA contributions
• Those uncertain about future tax rates might want to split contributions between both types

I personally like the diversification of having both account types. It gives me options in retirement for managing my tax situation year by year. That’s the beauty of being able to contribute to both – you don’t have to put all your retirement eggs in one basket!

Remember, while the contribution limits are combined, the benefits of these accounts are complementary. By understanding how these limits work together, you can craft a retirement strategy that maximizes your tax advantages both now and in the future.

Have you started contributing to your IRAs for 2025 yet? There’s no time like the present to start planning for your future!