How much can I contribute to an IRA?
For the 2024 and 2025 tax years, you can contribute up to $7,000 (or up to $8,000 for those age 50 or older by year end). For each year, you have until the federal tax deadline to make IRA contributions, which could reduce taxes on your previous year’s returns.
Note that contribution limits are the total you can contribute across all your traditional and Roth IRA accounts. And the amount you can contribute to a Roth IRA may be less, depending on your earned income, as the Roth IRA contribution limit is reduced if your modified adjusted gross income (MAGI) exceeds thresholds.
Can my spouse contribute?
Even if your spouse doesn’t work, he or she can contribute to a spousal Roth or traditional IRA if you are a wage-earner and you are married, filing jointly. However, there are limitations.
- You can’t contribute more than you earn in taxable compensation.
- In 2024 and 2025, in addition to your IRA contribution, your spouse may also contribute up to $7,000 for those under age 50 and $8,000 for those 50 and older to their spousal traditional IRA.
Are there age restrictions?
Working individuals may continue to contribute to their traditional or Roth IRAs for as long as they have earned income without age restrictions. This represents a change in the tax law as part of the SECURE Act of 2020.
Are there upper income restrictions?
There are no upper income restrictions on contributing to a traditional IRA, although there are income restrictions for taking a deduction for your IRA contribution if you or your spouse are participating in an employer plan at work, such as a 401(k).
Limitations to qualify for a deduction on your traditional IRA contributions
Married filing jointly, with a workplace plan: For 2024, phase out starts at $123,000 with no deduction at $143,000 and above. For 2025, phase out starts at $126,000 with no deduction at $146,000 and above.
Married, filing jointly, without a workplace plan (but your spouse participates in a plan): For 2024, phase out starts at $230,000 with no deduction at $240,000. For 2025, phase out starts at $236,000 with no deduction at $246,000.
Single and head of household, covered by a workplace plan: For 2024, phase out starts at $77,000 with no deduction at $87,000. For 2025, phase out starts at $79,000 with no deduction at $89,000.
Married, filing separately, if covered by a workplace plan: The phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
If you make deductible traditional IRA contributions and request a qualified charitable distribution (QCD), the QCD amount will be reduced by the amount of the traditional IRA deductions.
What are taxes and penalties for early withdrawal?
All pre-tax contributions and earnings you withdraw from your traditional IRA are taxable. If you are under age 59½ you may also have to pay a 10% tax for early withdrawals unless you qualify for an exception.