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
|
- Up to $6,000 for 2021 and 2022
For owners age 50 and older, you have higher limits:
Restrictions:
- Cannot exceed compensation
- Reduces contributions that can be made to Roth IRAs
|
Fully-deductible contributions:
- Single individuals not active in employer retirement plans
- Single individuals active in employer retirement plans with MAGI1 of $66,000 or less for 2021 and $68,000 or less for 2022
- 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 $105,000 or less for 2021 and $109,000 or less for 2022
- Married individuals not active in employer retirement plans with spouses who are, as long as MAGI2 is $198,000 or less for 2021 and $204,000 or less for 2022
|
- Earnings grow tax-deferred until withdrawn
- Contributions may be tax-deductible
|
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
|
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 $125,000 (single filers for 2021)
- Up to $129,000 (single filers for 2022)
- Up to $198,000 (joint filers in 2021)
- Up to $204,000 (joint filers in 2022)
Reduced contributions allowed for higher incomes.
Persons who are married and filing separately with incomes:
|
- Up to $6,000 for 2021 and 2022
For owners age 50 and older, you have higher limits:
- Up to $7,000 for 2021 and 2022
Restrictions:
- Cannot exceed compensation
- Reduces contributions that can be made to traditional IRAs
|
No one can deduct contributions
|
- Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59½, disability, death, or a first-time home purchase)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 age 72
|
- Regular contributions can be withdrawn tax-free and penalty-free at any time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
|