IRA Contributions 2018

You still have time to make IRA contributions

Your 2018 Roth and Traditional IRA contribution limits are unchanged however the income limits did slightly adjust. I find that many people believe they are getting a late start to their retirement planning, they ask me what can I do? Others may need an additional tax deduction, if you qualify you may be able to make a contribution into a Traditional IRA and receive a tax deduction for tax year 2017 up until April 17th, 2018! This allows you to add up to $5,500 if you are 49 and under or $6,500 if you’re 50 or older for Traditional IRA’s (combined annual limits of all contributions for Roth & Traditional IRAs). This rule is a huge advantage to many investors, if you did not max out or makes a full contribution into an either a Traditional IRA or Roth IRA last year you are eligible to do so until April 17th for tax year 2017.

Roth and Traditional IRA’s both have limits on who may contribute to them. A Roth IRA is based on income to qualify and there is a phase out range, if you are filing single your 2018 adjusted-gross income must fall within or under $120,000-$135,000 while married filing jointly the range is $189,000-$199,000. Both of these ranges increased from 2017 limits, single filers range was $118,000-$133,000 and married filing jointly was $186,000-$197,000. If you fall in the middle you may only contribute a partial contribution depending on a few factors, you may contact us for a breakdown of the phase out rules. A traditional IRA is a bit more complex and income is not the main factor.

You may be eligible for a Traditional IRA if you and/or your spouse do not have a retirement plan of any kind offered with your employer. If you are single with no plan with your employer, regardless of your income you likely qualify to make a tax-deductible contribution into a Traditional IRA. However, if you have a retirement plan then you will have a phase out range for your contribution to qualify as a tax deduction. For 2017 the AGI phase out range for a single filer was $62,000-$72,000 while 2018 had a slight increase $63,000-$73,000. For those who are married filing jointly and have retirement plans with their employers the income range to allow for a tax deductible contribution for 2017 was $99,000-$119,000, this increased to $101,000-$121,000 for 2018 taxable year. If one spouse has a plan and one does not there are different ranges, I suggest you reach out to your tax advisor or call our office to ensure you are following the correct IRA contribution rules set by the IRS. Remember, you must have ‘earned income’ to qualify for either a Roth or Traditional IRA and you can always contribute to a Traditional IRA regardless of your income and plan at work but the contribution is not always tax deductible.

Greg Feese, CRPC®, Financial Advisor
Legacy Wealth Management Group of Las Vegas