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When it comes to retirement savings, a traditional IRA is one of the most popular options. But many people don’t know what the income limits are for a traditional IRA. In this article, we’ll take a look at the income limits for a traditional IRA, as well as other important information about this type of retirement account.
First, it’s important to understand that the income limits for a traditional IRA depend on your filing status. For single filers, the income limit is $124,000, while for married couples filing jointly, the limit is $196,000. If you are married but filing separately, the limit is $10,000.
In addition to the income limits, there are also contribution limits for traditional IRAs. For 2020, the maximum amount you can contribute to a traditional IRA is $6,000, or $7,000 if you are age 50 or older.
It’s also important to note that if you are covered by a retirement plan at work, your traditional IRA deduction may be limited or eliminated. This is based on your modified adjusted gross income (MAGI). For single filers, if your MAGI is more than $65,000, you will not be able to take a deduction for your traditional IRA contribution. For married couples filing jointly, if your MAGI is more than $104,000, you will not be able to take a deduction.
Finally, it’s important to remember that if you are eligible to contribute to a Roth IRA, you should consider doing so instead of a traditional IRA. This is because Roth IRAs have more benefits, such as tax-free withdrawals in retirement and no income limits.
In conclusion, the income limits for a traditional IRA depend on your filing status, and if you are covered by a retirement plan at work, your deduction may be limited or eliminated. If you are eligible to contribute to a Roth IRA, you should consider doing so instead of a traditional IRA.
I was wondering if my income becomes higher than the limits and I still contribute to a traditional IRA, since its not tax deductible anymore, when I withdraw the money in the future, would I still be taxed?