2018 Roth IRA Limits and Roth 401k Limits: One Will Increase

Posted by Madison on October 24, 2017

The 2018 Roth IRA limits will not change again this year.

However, the Roth 401k contribution limits will increase by $500. It’s time to start planning your contributions.

The 401k limits and IRA limits are determined based on inflation, but can only increase in $500 increments.

The 2018 social security wage base increased by $1,500.

Roth IRA and Roth 401k Limits

I highlight the Roth IRA and the Roth 401k because they are my favorite retirement plans; the limits for traditional 401ks and IRAs are the same as the Roth 401k and Roth IRAs.

The 2018 limits will stay the same for the traditional IRA. Limits for the traditional 401k will increase. In addition, the increased limits also apply to 403b plans and most 457 plans.

2017 & 2018 Contribution Limits

Here are the official contribution limits from the IRS:

Roth 401k Contributions 2017 2018
Maximum $ 18,000 $ 18,500
Catch-up 50 and over $ 6,000 $ 6,000
Roth IRA Contributions 2017 2018
Maximum $ 5,500 $ 5,500
Catch-up 50 and over $ 1,000 $ 1,000

You can make your 2018 contributions as early as January 1, 2018 for the whole year. If you contribute 2018 Roth IRA money between January 1 and April 17, be sure to designate the calendar year 2018 if you have already contributed the maximum for 2017.

Since the 2018 limits will stay the same for the Roth IRA, if you use automatic investments, you probably won’t have to make any changes. You should contact your HR department to make changes to your Roth 401k deferral rate for 2018 if you want to take advantage of the increase.

To maximize your IRA investments, make sure you aren’t paying extra fees in your IRA. You can transfer your IRA to another broker to avoid annual fees. We use Vanguard for our IRAs.

Roth IRA Income Limits

The income limits for Roth contributions in 2018 went up slightly. You may contribute the full amount to your Roth IRA if your 2018 modified adjusted gross income is below $120,000 for singles ($189,000 for married). You may make partial contributions until your income hits $135,000 ($199,000 for married).

If your income is above that, you cannot contribute to a Roth IRA. If you are interested, there is a workaround called the Backdoor Roth IRA if your income is above the limits.

2017 Contribution Deadlines

The deadline for 2017 IRA contributions is April 17, 2018, the same as the tax deadline.

401k contribution deadlines are based on the calendar year. 2017 401k contributions are due at the end of the year.

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Comments to 2018 Roth IRA Limits and Roth 401k Limits: One Will Increase

  1. Using a Roth IRA for retirement is a great plan, especially if you’re young like me. I love the idea of having tax free withdrawals!! It’s a shame that the IRA limits didn’t go up this year, but it should have been expected. With very little inflation this year, nothing really went up.

    Chris Gagner @ SmartPF

  2. Good info. I had forgotten that you could wait till April 15th to contribute to your IRA for the prior year. I’ll have to take advantage of that!

    Chris

    • Many are not aware of this. It is why you don’t get your 5498 in the mail until May – so any previous year contribution made between Jan 1 and April 15 can be included in the prior year form.

      When I was younger and my budget was tighter, I took advantage of this all of the time. Any extra money I received between Jan 1 and April 15 went in as a prior year contribution. That way I could max out my account each year.

      Don @ MoneySmartGuides

  3. The company I work for offers both the 401K and Roth 401K. I’m 43. Is there a maximium limits for both or can the total of both not exceed $16,500 annual?

    Mark

    • Mark,

      The total of the traditional 401k and Roth 401k added together cannot exceed the $16,500 limit.

      Madison

  4. Does my contribution to a Roth 401K affect the maximum I can contribute to a Roth IRA? Specifically, can I contribute both 16.5K to the Roth 401K and 5K to the Roth IRA in 2011?

    Alan

    • Alan,

      Yes, you can contribute both the $16,500 to a Roth 401k and $5,000 to a Roth IRA.

      Madison

      • Your answer to Alan contradict with your answer to Mark. You told Mark,

        401K – Amount
        + IRA – Amount
        ———————-
        Cannot exceed 16,500

        So Mark should ensure that his IRA contribution is 5K and rest for 401K (16,500-5000) (if he chooses it)

        On the other hand, you responded to Alan that he can max 401K (16,500) and Max IRA (5000) with grand total
        21,500 investment .

        I am little confused? Perhaps I misunderstood ..

        Intekhab


      • His answer did not contradict. Total money added to 401K and roth 401K cannot exceed the maximum. So you can add 8250 to each, you could add 15000 to one and 1500 to the other.
        An IRA is totally different than a 401K and has a different limit. You can add 16500 to the 401K (roth or traditional). As well as the maximum 5000 for an IRA (roth or traditional). They are two seperate investment vehicles.
        Please understand that it is based off the investment vehicle. IRA and 401K are seperate so they have seperate limits.

        Does this make sense?

        Dan


  5. The last two answers on this page appear to contradict one another.

    Answer to Alan: Yes, you can contribute both the $16,500 to a Roth 401k and $5,000 to a Roth IRA.

    Answer to Mark: The total of the traditional 401k and Roth 401k added together cannot exceed the $16,500 limit.

    Which is correct????

    Terri

    • Terri,
      They are actually both correct.

      The limits are $16,500 for a 401k (Roth 401k, traditional 401k, or a combination of both) and $5,000 for an IRA (Roth IRA, traditional IRA or a combination of both).

      401ks and IRAs each have separate limits. It gets confusing because there are Roth and traditional accounts for both the 401k and IRA.

      Madison

  6. Do the 401k contribution limits include employer contributions?

    Mojito Chica

  7. If I have a retirement plan beginning date in 2011 and ending date in 2012, which deferral limits are correct, 2011 or 2012?

    Cathy

    • Do you mean IRA or 401k? 401k contributions made during a calendar year are counted for that year. 2011 limits were $16,500 and 2012 limits were $17,000. IRA contributions made before the IRS Regular Tax Filing Deadline (usually April 15th) can be counted for either the current year or for the prior year, you choose. IRA contribution limits in both 2011 & 2012 were $5,000 and if over 50 during the tax year, $6,000.

      JK Pate

  8. Are there any income limitations for investing in a roth 401K (the roth has a top end income limitation and then you cannot contribute)….does the roth 401k have the same?

    Second question….if I have a roth 401K and then need to roll that into a roth when I change employers….do I have a tax issue if I am over the income level for the roth ira contribution?

    Jim S.

  9. What is the maximum employer contribution to a Roth 401K
    (for 2014 and for 2015)?

    Charlie

  10. Can i rollover a 401k roth into a roth ira that has been set up for five years. Can they be in same account

    Thank You

    Blair Kain

  11. My contribution to my company 401k plan can be either 401k or 401k roth. The amount would be 24,000 if over 50 years old

    Thank You

    Blair Kain

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