Methods are presented for fabricating an MTJ element having a uniform vertical distance between its free layer and a bit line and, in addition, having a protective spacer layer formed abutting the lateral sides of the MTJ element to eliminate leakage currents between MTJ layers and the bit line. Each method forms a dielectric spacer layer on the lateral sides of the MTJ element and, depending on the method, includes an additional layer that protects the spacer layer during etching processes used to form a Cu damascene bit line. At various stages in the process, a dielectric layer is also formed to act as a CMP stop layer so that the capping layer on the MTJ element is not thinned by the CMP process that planarizes the surrounding insulation. Subsequent to planarization, the stop layer is removed by an anisotropic etch of such precision that the MTJ element capping layer is not reduced in thickness and serves to maintain uniform vertical distance between the bit line and the MTJ free layer.