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Exploring Contribution Limits

Maximum Limits, Eligibility, Deadlines, and More

What Is an IRA Contribution?

A Self-Directed IRA contribution is money that you can deposit into your Self-Directed IRA. To make an IRA contribution, you can send a check, wire, or cash to your IRA custodian to deposit into your IRA.

There are specific contribution rules and requirements based on the account type you open. Contributing to an IRA each year is optional, but typically beneficial. Contributing can help grow your retirement savings in a tax-advantaged account. 

The IRS sets Self-Directed IRA annual contribution limits, deadlines, and other rules that govern this retirement account.

Self-Directed IRA investors signing a document to make a contribution to their account.

Consider contributing to your Self-Directed IRA if you:

  • Seek to build wealth for your retirement 
  • Want to invest in alternative investments like real estate, precious metals, promissory notes, and more 
  • Need cash in your account to cover IRA expenses, as opposed to liquidating assets 
  • Want to get a tax deduction by contributing to a Self-Directed Traditional IRA  

When Is the IRA Contribution Deadline?

IRA Contribution Deadline

The deadline to contribute to a Self-Directed IRA is the tax filing deadline (not including extensions). For example, the deadline to make a 2024 IRA contribution is April 15, 2025.

Self-Directed Traditional IRA

*These contribution limits are also applicable to Self-Directed Traditional Checkbook IRAs.
 
2024 Contribution Limit
2025 Contribution Limit
Under Age 50
$7,000
$7,000
Age 50+
$8,000 ($1,000 catch-up contribution)
$8,000 ($1,000 catch-up contribution)

Eligibility: Who Can Contribute to a Self-Directed Traditional IRA?

You must have earned taxable income during the year to contribute to a Self-Directed Traditional IRA.

Self-Directed Roth IRA

*These contribution limits are also applicable to Self-Directed Roth Checkbook IRAs.
 
2024 Contribution Limit
2025 Contribution Limit
Under Age 50
$7,000
$7,000
Age 50+
$8,000 ($1,000 catch-up contribution)
$8,000 ($1,000 catch-up contribution)

Eligibility: Who Can Contribute to a Self-Directed Roth IRA?

To contribute to a Self-Directed Roth IRA, you must have earned taxable income during the year. In addition, your maximum annual contribution to your Self-Directed Roth IRA depends on your filing status and modified adjusted gross income (MAGI). Please see the MAGI Phase-Out Ranges for Self-Directed Roth IRA Contributions.

MAGI Phase-Out Ranges for Self-Directed Roth IRA Contributions

Filing Status
2025 MAGI
Maximum Annual Contribution
Single, Head of Household or Married Filing Separately (and did not live with a spouse at any time during the year)
Less than $150,000
Maximum Contribution Limit - $7,000 ($8,000 If Age 50+) 
 
$150,000 – $165,000
Reduced Contribution 
 
$165,000 or more
Not Eligible to Make an IRA Contribution
Married Filing Jointly or Qualifying Widow(er) 
Less than $236,000
Maximum Contribution Limit - $7,000 ($8,000 If Age 50+) 
 
$236,000 – $246,000 
Reduced Contribution
 
$246,000 or more 
Not Eligible to Make an IRA Contribution
Married Filing Separately (and lived with a spouse at any time during the year)
Less than $10,000
Reduced Contribution
 
$10,000 or more
Not Eligible to Make an IRA Contribution

Roth Conversion: Another Way to Fund Your Self-Directed Roth IRA

There is a “backdoor” strategy to potentially avoid the contribution limit restriction, known as a Roth Conversion. You can fund your account by converting a portion of your Self-Directed Traditional IRA to a Self-Directed Roth IRA. Taxes are paid on the converted amount. It’s important to become familiar with the Pro-Rate Rule and consult with a tax advisor to see if this strategy makes sense for your financial goals.

The deadline to convert your IRA for the current tax year is December 31.

Self-Directed SIMPLE IRA

*These contribution limits are also for Self-Directed SIMPLE Checkbook IRAs.
 
2024
2025
Employee Contribution Limit
$16,000
$16,500
Catch-up Employee Contributions (Age 50+)
Age 50+ can make a $3,500 catch-up contribution ($19,500 contribution total)
Ages 50-59 and 64+ can make a $3,500 catch-up contribution ($20,000 contribution total)

Age 60-63 can make a $5,250 catch-up contribution ($21,750 contribution total)
Employer Contribution
Match employee’s salary reduction contribution on dollar-for-dollar basis up to 3% of employee compensation (does not apply if employer makes nonelective contributions), or nonelective contributions of 2% of each eligible employee’s compensation*
Match employee’s salary reduction contribution on dollar-for-dollar basis up to 3% of employee compensation (does not apply if employer makes nonelective contributions), or nonelective contributions of 2% of each eligible employee’s compensation*
*Consider asking your employer which option they chose.

Eligibility: Who Can Contribute to a Self-Directed SIMPLE IRA?

  • Any employer (including self-employed individuals, tax-exempt organizations, and governmental entities) that have no more than 100 employees with $5,000 or more in compensation during the preceding year.  
  • An employer is not permitted to maintain or contribute to any other retirement plan within the same year.  

Contributions to SIMPLE IRAs are made from both employee salary reductions and employer non-elective or matching contributions. 

SIMPLE IRA Deadline

  • Employers must deposit employees’ salary reduction contributions to a SIMPLE IRA within 30 days after the end of the month that the employee would have received them in cash.  
  • Employers must make matching contributions or nonelective contributions by the deadline (including extensions) of the federal income tax return.
  • The Department of Labor rules require employers to transfer their employees’ elective deferral contributions at the earliest date that the employer can reasonably segregate the contributions from the employer’s general assets. Generally, employee contributions must be made within 7 business days following the deduction from their salary.

Self-Directed SEP IRA

 
2024 Contribution Limit
2025 Contribution Limit
SEP Contribution Limit
Up to 25% of net income, with a maximum of $69,000
Up to 25% of net income, with a maximum of $70,000
*If you are self-employed, please visit please visit IRS Publication 560 to calculate your SEP IRA contribution limit.

For more information on contribution limits, visit our 2025 Contribution Limit Updates

2025 IRA Contribution Limit Updates

Self-Directed IRA – FAQs

How Do I Add Money to My Self-Directed IRA?

You can fund your SDIRA by transferring or rolling over all – or a portion of – your funds from an existing retirement account, such as an IRA or 401(k), or by making an initial contribution.

How Do I Contribute to a Self-Directed IRA?

To contribute to a Self-Directed IRA, you can send a check or wire to your Self-Directed IRA custodian. For Madison Trust clients, contribution checks are made payable to “Madison Trust Company Custodian FBO [Your Name] [Your Madison Trust Account #] and mailed to Madison Administration Company at 1 Paragon Drive, Suite 275, Montvale, NJ 07645. For wire contributions, please see our Delivery Instructions.

In addition, please complete and submit a Deposit Information Form, indicating that you are funding your account via contribution.

Do I Have to Contribute to My Self-Directed IRA Every Year?

No, you are not required to contribute to your SDIRA each year. It is considered best practice to keep up with your IRA contributions to potentially grow your retirement savings in a tax-advantaged account.

Are IRA Contributions Tax-Deductible?

Contributions to IRAs are tax-deductible (except for Roth IRAs, which you pay taxes upfront to receive tax-free distributions in retirement). Deductions are determined by income, Cost of Living Adjustments (COLA), and if you are covered by an employer plan.

It is considered best practice to consult with a qualified tax or financial professional to determine if contributing to an IRA is right for you.

Can I Contribute to More Than One IRA?

Yes! You can contribute to a Self-Directed Traditional IRA and Self-Directed Roth IRA, even if you participate in another employer-sponsored plan such as a 401(k), SIMPLE IRA, or SEP IRA.

The maximum contribution limit remains the same if you contribute to more than one IRA. For example, if John contributes $5,000 to his Self-Directed Traditional IRA in 2025, he can only contribute $2,000 to his Self-Directed Roth IRA (total contribution for all IRA accounts is $7,000 in 2025 for those younger than age 50).

When Does a Self-Directed IRA Excess Contribution Occur?

The IRS states an excess IRA contribution may happen if any of the following occur:

       • The contribution limit is exceeded through one or more IRA accounts

       • The IRA owner contributes more than is earned

       • The MAGI exceeds the income limit for contribution to a Roth IRA

       • An IRA owner completes an improper rollover to an IRA

       • A Required Minimum Distribution (RMD) is rolled over

How Do I Remove Excess Contributions From My SDIRA?

If you contribute too much to your Self-Directed IRA, it must be corrected generally by the due date of your tax return (including extensions). If your excess contribution is not withdrawn from your account in time, the IRS will charge a 6% penalty tax per year on the excess amount in your SDIRA.

A few ways you can adjust your excess IRA contributions include withdrawal, recharacterization, or carrying it forward. For more information, please visit How To Correct Excess Self-Directed IRA Contributions.

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