Retirement contributions are top of mind, with only a few weeks remaining until the Tax Deadline. Below we will discuss the official deadline, contribution limits, ways to optimize your benefits between company-sponsored and personal accounts and provide a glimpse into what 2023 has to offer.
When is the deadline for making 2022 contributions?
The deadline for making any 2022 IRA contributions is Tuesday, April 18th, 2023.
- Even if you plan on getting an extension or already have one, this will NOT allow extra time to make 2022 contributions to your Traditional and Roth IRA.
What limits are currently in place for my contributions?
Maximum IRA contributions for 2022, if you’re under 50, are $6,000. If you are 50 or older, the limit increases to $7,000.
- It is important to note that contributions are an aggregate, not an account-by-account basis, meaning the 2022 limit applies to ALL IRAs as a whole, not each one individually.
- Example: You are under 50 and contributed $3,000 to your Traditional IRA plus another $3,000 to your Roth IRA. This means your contributions are maxed out for the 2022 year.
- A contribution phase-out for 2022 comes into play for Roth IRAs if you are filing as single with a modified adjusted gross income (MAGI) exceeding $129,000 or $204,000 if you are married filing jointly (MFJ).
- For 2022, if you are single and your MAGI was $144,000+, or $214,000+ as MFJ, you are not eligible to make any Roth IRA contributions.
- If your income surpasses these limits, there is still good news! Traditional IRAs do not have any income limits for contributions.
How can I optimize my benefits between my company retirement plan and personal IRAs?
More good news here. Participating in a company retirement plan does not affect your eligibility to make a Roth IRA contribution.
- Additionally, you can fully deduct your Traditional IRA contributions if you and your spouse are MFJ and were not active participants in a company-sponsored plan, regardless of your income level.
- However, a deductibility phase-out begins if you actively participated in your company’s retirement plan with MAGI exceeding $68,000 as a single individual or $109,000 if married.
- Lastly, if you were not an active participant but your spouse was, the phase-out for deductions will begin if your MAGI reached $204,000.
What is changing in 2023?
Contribution amounts received a modest increase this year. For those under 50, the IRA contribution limit is now $6,500, which jumps to $7,500 if you are 50 or older. For Roth IRA contribution eligibility, your MAGI cannot exceed $153,000 if filing as a single or $228,000 if MFJ.
Everyone’s ability to contribute differs, meaning speaking with a qualified financial professional is essential to find the best course of action for your unique situation.
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