Do Roth IRA contributions count toward defined contribution plan limits?

Forum|Forum|6 years ago
November 8, 2019
2 replies
8 views

With the IRS announcing the 2020 limits for DC plans as $57,000/year, up from $56,000, and the IRA contribution limits staying at $6,000, am I able to contribute the maximum to each ($63,000 not considering catch up provisions). Or do the Roth IRA contributions count toward the $57,000 limit?

Anonymous

ROTH contributions count against the maximum,

ensingbdAuthor

Level 2

Thank you. Do you have an IRS guideline that specifies that? I only ask because my company's HR team said the exact opposite - IRS considers IRA and 401k accounts separate for contribution purposes. I can't seem to find an answer either way in IRS rulebook.

macuser_22

Alumni - Champ

@ensingbd wrote:

Or do the Roth IRA contributions count toward the $57,000 limit?

IRA yearly contribution limits are totally separate from employer retirement plan limits. One has no effect on the other at all, however, Roth contribution limits can depend on MAGI as can Traditional IRA deduction limits when covered by a retirement plan at work.

Note that employer Roth plans (designated Roth) are NOT IRA's so the total employer plan limits apply.

The most you can contribute to all of your traditional and Roth IRAs is the smaller of:

For 2018, $5,500, or $6,500 if you’re age 50 or older by the end of the year; or
your taxable compensation for the year.
For 2019, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or
your taxable compensation for the year.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, alimony and separate maintenance, and nontaxable combat pay ).

See this IRS article for Roth contribution limits:

https://www.irs.gov/retirement-plans/roth-iras

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**