The IRA contribution limit for 2015 did not change from the 2014 amounts. It remains at $5,500 if you are under age 50. If you are age 50 or older in 2015, then you can contribute an additional $1,000 (known as a catch-up contribution) bringing your total to $6,500 for the year. The $1,000 catch-up contribution is not subject to a COLA adjustment.
The limit is actually $5,500 ($6,500 if you’re age 50+) or 100% of your “taxable compensation,” whichever is less. For example, let’s assume your compensation for the year is $30,000 and you’re under age 50, the most you can contribute to an IRA or Roth IRA is $5,500 (i.e., the smaller of $5,500 or $30,000). Conversely, if we assume your compensation is $3,000, then your maximum IRA contribution would be $3,000 (i.e., the smaller of $5,500 or $3,000). To make an IRA or Roth IRA contribution, you need to have taxable compensation, which is money you earn at a job. This includes your salary, tips, bonuses, or profit you earned from a self-employed business. It does not include passive income such as dividend income, interest income, capital gains, Social Security payments, or withdrawals from an IRA or company retirement plan.
This $5,500 limit is the maximum IRA contribution for the year and applies to both IRAs and Roth IRAs. It is a combined limit meaning that you can contribute to both an IRA and a Roth IRA for the same year, as long as your total contributions for the year doesn’t exceed the $5,500 (or $6,500) limit. For example, let’s assume you’re age 60; you might contribute $4,000 to your IRA and the remaining $2,500 to your Roth IRA for a total of $6,500.
Also know that to contribute to an IRA, you must be under age 70 ½ for the year. For a Roth IRA, your total income, what the IRS calls modified adjusted gross income (MAGI) must be under a certain amount to make a contribution. For example, in 2014 if you are married filing jointly, your MAGI must be under $181,000 ($183,000 in 2015) to make a full contribution to a Roth IRA or $96,000 ($98,000 in 2015) if you are single.