Traditional IRA |
- Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation)
- Anyone who has received a distribution from a qualified retirement plan and decides to roll over the proceeds of the plan into an IRA
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- Up to $6,500 for 2023 and $7,000 for 2024
For owners age 50 and older, you have higher limits:
- $7,000 for 2023 and $8,000 for 2024
Restrictions:
- Cannot exceed compensation
- Reduces contributions that can be made to Roth IRAs
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Fully-deductible contributions:
- Single individuals not active in employer retirement plans
- Single individuals active in employer retirement plans with MAGI1 of $83,000 or less for 2023 and $87,000 or less for 2024
- Married couples with neither spouse active in an employer retirement plan
- Married individuals active in employer retirement plans with joint tax returns showing MAGI of $136,000 or less for 2023 and $143,000 or less for 2024
- Married individuals not active in employer retirement plans with spouses who are, as long as MAGI2 is $228,000 or less for 2023 and $240,000 or less for 2024
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- Earnings grow tax-deferred until withdrawn
- Contributions may be tax-deductible
- 2023 and 2024: Required to start withdrawals at age 73
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Withdraw penalty-free for any of the following reasons:
- Qualified higher-education expenses
- First-time home purchase2
- Age 59½
- Disability
- Qualifying medical expenses exceeding 7.5% of adjusted gross income
- Payment to beneficiaries upon the owner’s death
- Payment of health insurance premiums while unemployed for 12 weeks or longer
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Roth IRA |
Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following MAGI:
- Up to $153,000 (single filers for 2023)
- Up to $161,000 (single filers for 2024)
- Up to $228,000 (joint filers in 2023)
- Up to $240,000 (joint filers in 2024)
Reduced contributions allowed for higher incomes.
Persons who are married and filing separately with incomes:
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- Up to $6,500 for 2023 and $7,000 for 2024
For owners age 50 and older, you have higher limits:
- $7,000 for 2023 and $8,000 for 2024
Restrictions:
- Cannot exceed compensation
- Reduces contributions that can be made to traditional IRAs
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No one can deduct contributions
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- Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59½, disability, death, or a first-time home purchase)
- Not required to start withdrawals at any age
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- Regular contributions can be withdrawn tax-free and penalty-free at any time
- After the account has been open five tax years, earnings can be withdrawn tax-free and penalty-free for any of these reasons: age 59½, disability, death, or a first-time home
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