Retirement is something that should be enjoyed. The best way and most likely way to have a great retirement is to not only plan for it but to also save for it by contributing to a retirement account. The most popular retirement accounts are the IRA and 401k. Sadly, there are certain restrictions to contributing to 401ks and IRAs. Let's dive into who can contribute to an IRA.
Just about anyone can contribute to a traditional IRA, as long as you (or your spouse) receive taxable income and you are under the age of 70 ½. Your contributions are only tax deductible if you meet the following
- If you have no retiremnt plan at work and you're younger than 70 ½, you can put money in (up to the annual contribution limit) and deduct the entire amount from your taxes. If your combined earned income is $89,000 or less and your spouse doesn't work they can contribute and have it the full amount deducted.
- If you have a 401k or other retirement plan at work your contribution is only fully deductible if your adjusted gross income is less than $89,000 for a married couple filing jointly or $56,000 as an individual.
- Your traditional IRA contribution is phased out completely if you have a workplace retirement plan and if your adjusted gross income is $109,000 or more as a married couple filing jointly or $66,000 or more as an individual, or $10,000 for a married person filing seperately.
- If you don't have a workplace retirement plan but your spouse is, your contribution is fully decutible as long as your combined income is less than $167,000 and gets phased out at $177,000 or more.
Roth IRA contributions are sadly never tax deductible but you also must certain income requirements in order to make contributions. The following are the income requirements in order to contribute to a roth IRA:
- Your modified adjusted gross income must be $183,000 or less if you are married and filing jointy. If you are single, the head of household or married and filing separately and didn't live with your spouse at any time during the year your adjusted gross income must must be $125,000 or less. If you make only a little bit more than those amounts you may still be able to make a partial contribution.
The traditional IRA and roth IRA are the most popular IRA accounts and if you can contribute to them they are a great way to really get the most out of your retirement.
Contact us today and figure out how you can start investing in a roth or traditional IRA and better yet figure out how we can help you start investing in things other than the stocks and bonds. What types of investments can you invest in? You can invest in real estate, gold and far more things. Most of the great investment opportunities you can think of are possible through an IRA.
Author: Nick Barker