Traditional IRAs allow you to deduct up to your full contribution amount from your income for tax purposes. For instance, if you earn $50,000 but also make a $5,000 contribution to your Traditional IRA, you'll only have to pay taxes on $45,000 for the year.
|Tax Year||Annual Contribution Limit |
(below age 50)
|Annual Contribution Limit |
(age 50 or above)
Cash or assets that you transfer or roll from another qualified plan will not count against these annual limits. You can make a contribution to a new Traditional IRA for a given tax year even if you open the account in the following calendar year.
EXAMPLE: You open a Traditional IRA on February 1, 2021. You can still make 2020 contributions until April 15, 2021 even though your account was not open during the 2020 calendar year.
As of 2021, you may contribute to a Traditional IRA at any age, as long as you earn verifiable and taxable income to garner the tax-deferred benefits of Traditional IRA contributions. Your modified adjusted gross income (MAGI) may affect the deductibility of your contributions. Click here for more information from the IRS.
Consult with your accountant or tax professional for more information about how your MAGI may affect your Traditional IRA contributions.
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