Requirement for IRA Contributions

Individual Retirement Account (IRA) contributions are subject to certain requirements set forth by the Internal Revenue Service (IRS) in the United States. Here are some of the key requirements:

1. Eligible Income: You must have eligible compensation or earned income to contribute to an IRA. This typically includes wages, salaries, commissions, self-employment income, and alimony. Passive income such as interest, dividends, and capital gains generally do not count unless they are derived from self-employment activities.
2. Age Limits: There are no age limits for contributing to a Traditional IRA. However, for a Traditional IRA, you must be under the age of 70½ at the end of the tax year in which you make the contribution. For a Roth IRA, you can contribute at any age as long as you have eligible earned income.
3. Contribution Limits: The IRS sets annual contribution limits for IRAs. These limits can change from year to year. For example, in 2022, the annual contribution limit for both Traditional and Roth IRAs was $6,000 for individuals under 50 years old, with an additional $1,000 “catch-up” contribution allowed for individuals aged 50 and older.
4. Income Limits for Roth IRA: While there are no income limits for contributing to a Traditional IRA, there are income limits for contributing to a Roth IRA. These limits can change annually and depend on your tax filing status. If your income exceeds these limits, you may be limited in the amount you can contribute or may not be eligible to contribute to a Roth IRA at all.
5. Spousal IRA Contributions: If you are married and file a joint tax return, you and your spouse can each contribute to your own separate IRAs even if only one of you has taxable compensation.
6. Tax Deductibility: Whether your contributions to a Traditional IRA are tax-deductible can depend on your income and whether you or your spouse are covered by a retirement plan at work.
7. Deadline for Contributions: You can make contributions to an IRA up until the tax filing deadline for the tax year. For example, contributions for the tax year 2023 can be made until the tax filing deadline in 2024 (usually April 15th, but it can vary depending on weekends and holidays).