April 18, 2022, is the deadline to make your 2021 IRA contributions. The 2021 limit is $6,000 per individual for Traditional or Roth IRA. If you are age 50 or older, you qualify for an additional $1,000 catch-up contribution. If you’d like to learn about the difference between a Traditional and Roth IRA, we’ve created a short video: Wealth Essentials by AWMI: Roth vs Traditional.
Anyone with earned income (self-employed or from employment) can contribute to an IRA, up to the maximum contribution or your earned income, whichever is lower. The kind of IRA and the treatment of the contribution depends on your modified adjusted gross income (MAGI). There is one exception to this rule; a spouse with little or no earned income can make IRA contributions based on the other spouse’s earned income subject to the rules and limits below.
The rules for a Roth IRA are simple; if your MAGI is below $198,000 as a Married Filing Joint taxpayer, you can make a full contribution (see chart for all single/head of household limits and phaseout ranges).
Anyone with earned income can contribute to a Traditional IRA, but your ability to deduct those contributions depends on your situation and income: Â
- If a qualified retirement plan covers neither you nor your spouse: you have no income limits on the ability to deduct your Traditional IRA contributions.
- If a qualified retirement plan covers your spouse but not you: you can make deductible contributions if your MAGI is below $198,000.
- If a qualified retirement plan covers you: your contributions are deductible if your MAGI is below $105,000.
The limits above are for full contributions. You may still qualify for partial contributions/deductibility if your income is in the ranges in the table below. You should consult your CPA to confirm your modified adjusted gross income and what type of IRA is best for your tax strategies.
Don’t forget 2021 HSA contributions have the same deadline of April 18, 2022. You can learn more about HSAs from Meghan Carson’s blog: The “Triple Threat” Savings Vehicle.
Call us at 907-272-7575 or email your advisor team to coordinate depositing your 2021 contribution.
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Income Limits and Phaseout Ranges |
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Tax Filing Status |
Roth IRA |
Traditional IRA (Qualified Plan Participant) |
Traditional IRA (Spouse is a Qualified Plan Participant) |
|
Married Filing Joint |
$198,000 – $208,000 |
$105,000 – $125,000 |
$198,000 – $208,000 |
|
Single/Head of Household |
$125,000 – $140,000 |
$66,000 – $76,000 |
NA |
Nic Cohen
Associate Financial Advisor
3/28/22
