Contributing to an IRA

Individual Retirement Account (IRA)  contributions for retirement

Contributing to an Individual Retirement Account (IRA) is a great way to save for retirement while potentially lowering your taxable income. Here’s how to do it:

1. Choose Your IRA Type

• Traditional IRA: Contributions may be tax-deductible, and you pay taxes when you withdraw funds in retirement.

• Roth IRA: Contributions are made with after-tax dollars, but withdrawals in retirement are tax-free.

2. Check Contribution Limits (2024)

• Under 50 years old: Up to $7,000 per year.

• 50 and older: Up to $8,000 (includes a $1,000 "catch-up" contribution).

3. Verify Eligibility

• Traditional IRA: No income limits, but deductibility may phase out based on income and workplace retirement plans.

• Roth IRA: Income limits apply (for 2024, full contributions phase out at $146,000 for single filers and $230,000 for married filing jointly).

4. Open an IRA Account

You can open an IRA at:

• Banks or credit unions

• Brokerage firms (e.g., Vanguard, Fidelity, Charles Schwab)

• Robo-advisors found in many brokerage firms

5. Make Your Contribution

• You can contribute via bank transfer, check, or direct deposit from your paycheck (if available).

• Contributions may be made until April 15 of the following tax year. For example, for the tax year of 2024 contributions can be made until April 15, 2025

6. Report Contributions on Your Tax Return

• Traditional IRA: Report on Form 1040, Schedule 1 (if deductible).

• Roth IRA: No deduction needed, but report contributions for tracking purposes.