Accounts · Investing Glossary
What Is Contribution Limit?
The maximum amount the IRS allows an individual to deposit into a retirement account each year.
The Full Definition
A contribution limit is the maximum amount the IRS permits an individual to deposit into a tax-advantaged account like a Roth IRA, Traditional IRA, or 401(k) in a given year. These limits typically rise gradually over time to keep pace with inflation, and most accounts offer a higher "catch-up" limit for savers age 50 and older. Contributing beyond the limit triggers tax penalties, so it's worth tracking — especially for anyone contributing to multiple accounts or switching jobs mid-year.
Real-World Example
For 2026, the combined Traditional and Roth IRA contribution limit is $7,500 per year ($8,600 if you're 50 or older) — meaning you can split that total across both account types, but not exceed it in aggregate.
Related Terms
- Roth IRAA retirement account funded with after-tax dollars; growth and withdrawals are tax-free.
- Traditional IRAA retirement account funded with pre-tax dollars; you pay taxes when you withdraw.
- 401(k)An employer-sponsored retirement savings plan with pre-tax contributions and potential employer match.
- Tax-Advantaged AccountAn account that offers special tax benefits, like tax-free growth or tax-deductible contributions.