If you are wondering whether you are eligible to make a deductible contribution to a Traditional IRA in 2024, the answer depends on several factors, including your income, tax filing status, and whether you or your spouse are covered by a retirement plan at work.
Please note, the information contained here is for 2024. The information contained applies for 2024 contributions.
I also refer to MAGI or Modified Adjusted Gross Income. If you don’t understand what MAGI is please click this LINK
First, it’s important to know that the contribution limits for Traditional IRAs in 2023 are $7,000 for individuals under the age of 50 and $8,000 for those 50 and over. However, these limits may be reduced or eliminated depending on your income and tax filing status.
If you are single or head of household, and you are covered by a retirement plan at work, your ability to make a deductible contribution to a Traditional IRA phases out if your modified adjusted gross income is between $77,000 and $87,000. If your MAGI is above $87,000, you are not eligible to make a deductible contribution.
If you are married filing jointly, and you are covered by a retirement plan at work, the phase out range for deductible Traditional IRA contributions is $123,000 to $143,000 for MAGI. If your MAGI is above $143,000, you are not eligible to make a deductible contribution.
If you are married filing jointly, and you are not covered by a retirement plan at work, but your spouse is covered by a retirement plan at work, the phase out range for deductible Traditional IRA contributions is $230,000 to $240,000 for MAGI. If your MAGI is above $240,000, you are not eligible to make a deductible contribution.
If you or your spouse are not covered by a retirement plan at work, your eligibility to make a deductible Traditional IRA contribution is not affected by your income or tax filing status.
It’s important to note that even if you are not eligible to make a deductible contribution, you may still be able to contribute to a Traditional IRA. These contributions are not tax-deductible, but they may be eligible for tax-deferred growth and can be withdrawn tax-free in retirement if certain conditions are met.
Whether you can make a deductible Traditional IRA contribution in 2024 depends on your income, tax filing status, and whether you or your spouse are covered by a retirement plan at work. It’s a good idea to consult with a financial professional or use tax software to determine your eligibility and the potential tax benefits of contributing.
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