IRA Contribution Questions at Tax Time
By Beverly DeVeny, IRA Technical Expert
Follow Me on Twitter: @BevIRAEdSlott
It is becoming more and more evident that in order to have an adequate income in retirement, at least some of your income is going to have to come from your savings. Don’t overlook the ability to make IRA contributions to supplement other retirement savings you might have. You have until April 17, 2012 to make a contribution for 2011.
Below are some frequently asked questions and our answers.
Can I make a contribution? As long as you have earned income and, for IRA contributions, you are under age 70 ½ for the entire year, you can contribute up to a maximum of $5,000 to your IRA or Roth IRA but no more than $5,000 to all IRAs and Roth IRAs combined. If your earned income is less than $5,000, you can contribute up to the amount of your earned income. Participation in an employer plan, including SEP and SIMPLE plans, has NO impact on your ability to make an IRA contribution. There are income limits for making a Roth IRA contribution but you can contribute after age 70 ½. If you are age 50 or older during the year, you can contribution an additional $1,000 to your IRA or Roth IRA for a total contribution amount of $6,000 for 2012.
Can I make a contribution for my non-working (or lower wage earning) spouse? As long as you and your spouse meet the requirements listed above, a full or partial contribution can be made for a non-working spouse.
Can I deduct my contribution? Deductibility depends on several factors. These include whether or not you or your spouse is considered covered (not contributing) by an employer plan, your income, and your tax filing status. You can never deduct a Roth IRA contribution.
You can find more information on earned income, deductibility, and Roth income limits in IRS Publication 590. It is available on the IRS website at www.irs.gov. On the left hand side of the screen, click on Forms and Publications. Best of all, it is free.
Editor's Note: Or, because we are all about making it easier for you, click here to find IRS Publication 590.
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