IRA Contributions: Who Can Make Them and What’s the Deadline?
Money Girl explains the simple rules about who can contribute to a traditional IRA and the annual deadline.
Laura Adams, MBA
A traditional IRA, which stands for Individual Retirement Arrangement, is a terrific savings vehicle. It allows you to build a retirement nest egg and reduce the amount of tax you have to pay in the current year.
A secure retirement and tax savings—sign me up!
Just about everyone can contribute to a traditional IRA, but there are a couple of rules to know:
- You must be under the age of 70½
- You must have taxable compensation or a spouse who does
Many stay-at-home spouses don’t realize that they can also have an IRA, even if they don’t earn income. Click here to learn the rules for using a spousal IRA.
You can make one or multiple IRA contributions at any time during the year. Plus, you can make them up to your tax filing date in the following year. For instance, you can make IRA contributions for 2014 right up to the April 15, 2015 deadline.
For 2014, you can contribute up to $5,500. And if you’re at least 50 years old, you can contribute up to $6,500. The additional $1,000 is called the “catch-up” provision to help those who may have gotten a late start on investing for retirement.
The amount of tax savings you get from making traditional IRA contributions is based on several factors. These include the amount you contribute, your tax filing status (such as single or married filing jointly), and whether you, or your spouse, are covered by an employer-sponsored retirement plan.
If you’re interested in the benefits of contributing to a Roth IRA instead of a traditional account, don’t miss my 2-part post or podcast called Your Guide to the Roth IRA.
To learn more about IRAs also see IRS Publication 590opens PDF file .
Other Money Links You Might Like
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Investment Tips: How and Where to Invest (the Easy Way!)
What’s the Difference Between a Traditional and Roth IRA?
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.