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As a new year approaches, it is important to plan for your financial future by deciding on the amount to contribute to your traditional IRA account.

For the year 2023, the contribution limit for traditional IRA accounts remains the same as in 2022. Individuals under the age of 50 can contribute up to $6,000, while those over the age of 50 can contribute up to $7,000 using catch-up contributions.

Contributing to a traditional IRA account offers tax benefits, as contributions are tax-deductible and investment earnings grow tax-deferred. This means that the money invested in the account and any interest earned will not be taxed until the money is withdrawn during retirement.

However, it is important to note that there are income limits for traditional IRA contributions. For those who have access to a retirement plan at work, the ability to deduct contributions to a traditional IRA phases out at certain income levels. For 2023, the phase-out starts at $69,000 for single filers and $116,000 for joint filers.

Even if you cannot deduct your contributions, it is still worthwhile to contribute to a traditional IRA as the investment earnings will still grow tax-deferred.

Another important factor to consider when contributing to a traditional IRA is timing. Contributions for a given year can be made up until the tax filing deadline for that year, which is usually April 15th of the following year. This means that your contributions for the year 2023 can be made until April 15th, 2024.

Making regular contributions to your traditional IRA account is a great way to build up your retirement savings over time. It is important to take advantage of the tax benefits and contribute as much as you can afford up to the contribution limit. By planning ahead and starting early, you can set yourself up for a comfortable retirement in the future.