What are the contribution limits for IRAs?

The contribution limits for IRAs vary depending on the type of IRA and an individual's age. For traditional and Roth IRAs, the contribution limit for individuals under 50 years old is $6,000 per year. Those who are 50 years old and above can make an additional catch-up contribution of $1,000, bringing their total limit to $7,000. However, contributions to a traditional IRA may be limited based on income and whether an individual is covered by a retirement plan at work. For Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) IRAs, the limits are higher. Employers can contribute up to 25% of an employee's compensation or $58,000 (for 2021), whichever is lower, for SEP IRAs. For SIMPLE IRAs, employees can contribute up to $13,500 (for 2021) or $16,500 if 50 years old and above, with an additional employer match. It is essential to consult with a financial advisor or refer to the IRS guidelines for accurate and up-to-date information.