You can still make IRA contributions if you don’t work for an entire calendar year—or even if you don’t work at all during a year, in some cases. As long as you or a spouse have eligible income for a given year, you’re allowed to make IRA contributions.

That may be helpful to know if you’re retiring early, or if you otherwise want to take advantage of tax features available from IRAs. For instance, you might want to get a tax deduction by making a pre-tax IRA contribution—saving you money on taxes for the current year. Or, you might prefer Roth IRA contributions, which can potentially lead to tax-free income in retirement.

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In this video, we explore the different types of earned income that allow you to make IRA contributions. Just remember that having too much income can complicate things. For example, you might not be allowed to deduct your contributions, or you might be disqualified from adding to a Roth IRA if your income is above certain levels.

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Of course, this is all general information and is not specific tax advice. It’s critical that you review everything with a CPA before you decide to do anything (or nothing). Don’t base your decisions off of the information here, as there could be unwanted tax consequences if you move forward without getting more information.

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IMPORTANT:
It’s impossible to cover everything you need to know in a video like this. The only thing that’s certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. “Likes” should not be considered a positive reflection of the investment advisory services offered by Approach Financial, Inc. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration….(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA

IRA Contributions: Am I Allowed?

Individual Retirement Accounts (IRAs) are a great way to save for retirement while potentially taking advantage of tax benefits. However, not everyone is eligible to contribute to an IRA. There are specific rules and limitations that you need to be aware of before making contributions.

One of the primary requirements for contributing to an IRA is having earned income. This includes income from wages, salaries, bonuses, and commissions. If you are unemployed or earning income solely from investments, you may not be eligible to make IRA contributions.

Another rule to consider is age restrictions. You must be under the age of 70 and a half to contribute to a traditional IRA. If you are older than 70 and a half, you can still contribute to a Roth IRA as long as you have earned income.

Additionally, there are income limits for contributing to a Roth IRA. For 2021, if you are a single filer, your modified adjusted gross income must be less than $140,000 to make a full contribution. For married couples filing jointly, the income limit is $208,000. If your income exceeds these limits, you may not be able to contribute to a Roth IRA, but you can still contribute to a traditional IRA.

It is essential to keep in mind that contribution limits apply to both traditional and Roth IRAs. For 2021, the maximum contribution limit is $6,000 for individuals under the age of 50 and $7,000 for those age 50 and older. If you contribute more than the allowed limit, you may be subject to penalties and taxes.

Lastly, keep in mind that you may also be eligible to contribute to an employer-sponsored retirement plan, such as a 401(k). If you have access to a retirement plan through your employer, your ability to make deductible contributions to a traditional IRA may be limited based on your income.

In conclusion, IRA contributions are a valuable tool for saving for retirement, but not everyone is allowed to contribute. Be sure to review the eligibility requirements, contribution limits, and income restrictions before making any contributions to an IRA. It is also a good idea to consult with a financial advisor or tax professional to ensure that you are making the best choices for your retirement savings.