You're allowed to contribute up to $7,000 to a traditional IRA in 2024 ($6,500 in 2023), as long as you have earned income. In addition, if you're age 50 or older, you can make an extra "catch-up" contribution of $1,000 in 2024 (and 2023). You can make your annual contribution up until the due date of your federal return (generally April 15 of the following year), either in a series of payments or in one lump sum. The beauty is that practically anyone who has a paying job can set up and contribute to a traditional IRA. Also, if you meet certain conditions, you may be able to contribute an additional $7,000 in 2024 to an IRA in your spouse's name (plus an additional $1,000 catch-up contribution if your spouse is age 50 or older), even if your spouse has little or no income.1
However, whether or not you can deduct your traditional IRA contributions will depend on several factors, such as your income, your tax filing status, and whether you or your spouse is covered by an employer-sponsored plan. You may be able to deduct all, a portion, or none of your contribution for a given year. You may even qualify for a partial tax credit.
Roth IRA
On the other hand, contributions to Roth IRAs are never tax deductible, but a tax credit may be available and qualifying distributions will be tax free. Also, even though the same dollar caps on yearly contributions apply to Roth IRAs ($7,000 in 2024, $1,000 catch-up contribution if age 50 or older), not everyone will qualify to take full advantage of direct contributions to a Roth IRA. The amount you can contribute to a Roth IRA (if anything) will be based on your income and filing status. As with traditional IRAs, you may be able to contribute to a Roth IRA on behalf of your spouse.
Keep in mind that your combined annual contribution to all of your IRAs in 2024 — Roth and Traditional — cannot exceed the overall contribution limit of $7,000 ($8,000 if you're age 50 or older).
Visit a Rockland Trust branch near you to open, contribute to or review your IRA today.
