IRA Contribution Rules
February 8, 2023The maximum contribution for 2023 individual retirement account contributions is $6,500 ($7,500 if aged 50 and over). There are income limits that determine whether you can deduct your Traditional IRA contribution or if you qualify to make a Roth IRA contribution.
The question of choosing between a Traditional IRA and Roth IRA largely comes down to when it’s most opportunistic for you to pay taxes.
A Traditional IRA is a great option if you’re in your mid-to-late career and in your peak earnings years. Because of your high income, you’re likely paying a high marginal rate on your income taxes. With the Traditional IRA, you can put away pre-tax dollars and avoid the high tax rates today. Then, with some strategic planning, you can potentially pay a lower amount of taxes when you withdraw the funds in retirement.
The Roth IRA is a great option if you’re a younger investor who is early in your career. The dollars you save will be after-tax dollars, and you won’t have to pay income tax on them when you withdraw them later in retirement. Federal income tax rates are at generational lows right now, so it’s a great idea to pay taxes on savings now, allow them to grow, and get them tax free 20 to 30 years later.
There are income limits which determine whether you can deduct your Traditional IRA contribution or if you qualify to make a Roth IRA contribution. The following tables give the phase-out range for the most common circumstances. Keep in mind that if neither you nor your spouse participate in a work-sponsored plan, you can deduct Traditional IRA contributions regardless of your income.
Please remember in the tables below that if your income is less than the beginning of the phase-out range, you qualify. If your income is over the phase-out range, you do not. If your income falls inside the range, you partially qualify.
Do you qualify to deduct your Traditional IRA contribution?
Modified Adjusted Gross Income Phase-Out Range
| Tax Filing Status | For 2022 Contributions | For 2023 Contributions |
| Single, participates in an employer- sponsored retirement plan: |
$68,000 – $78,000 | $73,000 – $83,000 |
| Married filing jointly, participates in an employer-sponsored retirement plan: |
$109,000 – $129,000 | $116,000 – $136,000 |
| Married filing jointly, your spouse participates in an employer-sponsored retirement plan, but you do not: |
$204,000 – $214,000 | $218,000 – $228,000 |
Do you qualify to contribute to a Roth IRA?
Modified Adjusted Gross Income Phase-Out Range – Roth
| Tax Filing Status | For 2022 Contributions | For 2023 Contributions |
| Single and heads of household: | $129,000 – $144,000 | $138,000 – $153,000 |
| Married, filing jointly: | $204,000 – $214,000 | $218,000 – $228,000 |
If your filing status differs from those listed above, please contact your advisor and they can help you determine whether you qualify.
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