Tax season is in full swing. That means that the 2022 tax-filing deadline is not far away. Are you considering making a 2022 IRA contribution? Time is quickly running out. Here are three tips to help get your contribution done the right way.

  1. DON’T Miss the Deadline.

The deadline for making your 2022 IRA contribution is the tax-filing deadline, Tuesday, April 18, 2023. Do you have an extension? That won’t buy you more time. Even if you have an extension, your deadline for a traditional or Roth IRA contribution is still April 18, 2023.

  1. DON’T Exceed your Limits.

The maximum contribution that you can make to an IRA for 2022 if you were under 50 is $6,000. If you reached age 50 or older in 2022, the maximum contribution limit is $7,000. The annual limit is aggregated for traditional and Roth IRAs. You may not contribute $6,000 to your traditional IRA and $6,000 to your Roth IRA for 2022.

Your IRA contribution generally may not exceed your taxable compensation or earned income for 2022. However, if you are married you may be able to use your spouse’s earned income or taxable compensation to make your IRA contribution.

If your 2022 modified adjusted gross income (MAGI) exceeded $129,000 if you are single, or $204,000 if you are married and filing jointly, your ability to contribute to a Roth IRA for 2022 begins to be phased out. There are no income limits for traditional IRA contributions. Age does not preclude you from contributing to an IRA. You may make either a traditional or Roth IRA contribution at any age if you are otherwise eligible.

  1. DO Maximize your Benefits.

Many people miss out on the benefits of IRA contributions simply because they do not understand the rules This is particularly true when it comes to how participation in a company plan affects your IRA contribution.

Here is some good news: participating in a company plan does not affect your eligibility to make a Roth IRA contribution at all! More good news . . . . if you and your spouse, if married, are not active participants in a company plan, you can fully deduct your traditional IRA contribution regardless of how high your income is.

However, if you were an active participant in your company’s retirement plan, and your MAGI exceeded $68,000 if you are single, or $109,000 if you are married, your ability to deduct your 2022 traditional IRA contribution begins to phase out. If you were not an active participant, but your spouse was your ability to deduct phases out when MAGI reached $204,000.

 

 

By Sarah Brenner, JD
Director of Retirement Education

Copyright © 2023, Ed Slott and Company, LLC Reprinted from The Slott Report, 2022, with permission. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article. Content posted in Ed Slott’s IRA Corner was developed and produced by Ed Slott & Co. to provide information on a topic that may be of interest. Ed Slott and Ed Slott & Co. are not affiliated with Ethos Capital Management, Inc. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.  The tax information provided is general in nature and should not be construed as legal or tax advice. Information is derived from sources deemed to be reliable. Always consult an attorney or tax professional regarding your specific legal, or tax situation. Tax rules and regulations are subject to change at any time. Ethos Capital Management, Inc. is a registered investment adviser. The firm only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.