Nov 20

Maximum Contributions for Your Self Directed IRA and Roth IRA

The maximum contribution limit for a self-directed IRA for 2017 is $5,500 or $6,500 if you’re age 50 or older, or your taxable compensation for the year, if less. Contributions to a self-directed Roth IRA may be limited based on your filing status and income.

Contributions made to a self-directed IRA LLC must be made to the IRA administrator/custodian and may not be contributed directly to the LLC. Once the IRA contribution is made to the IRA administrator/custodian, the funds can then be transferred to the IRA LLC.

Is my IRA contribution deductible on my tax return?

If neither you nor your spouse is covered by an employer retirement plan, such as a 401(k), your deduction is allowed in full.

For contributions to a traditional IRA, the amount you can deduct may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. In the case of a Roth IRA, contributions aren’t deductible.

Maximum Contributions for Your Self Directed IRA and Roth IRACan I contribute to a traditional or Roth Self-Directed IRA if I’m covered by a retirement plan at work?

Yes, you can contribute to a traditional and/or Roth self-directed IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan). If you or your spouse is covered by an employer-sponsored retirement plan, such as a 401(k) plan and your income exceeds certain levels, you may not be able to deduct your entire contribution.

Can I establish a self-directed IRA if only one spouse has earned income for the year?

Yes. If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return and cannot exceed the maximum IRA contributions for the year (for 2017 $5500 or $6500 if over the age of 50). It doesn’t matter which spouse earned the compensation.

How can I make a Roth IRA contribution if I earned too much money in 2017?

For 2017, if your modified adjusted gross income is below $181,000 and you file a joint return, you can make a Roth IRA contribution. For those who earned greater than $181,000 during the year, the IRS provides a formula, which will set forth the reduced maximum amount of Roth IRA contributions permitted for the year, if any.

One way to circumvent the Roth IRA income threshold rules, if to simply make an after-tax traditional IRA contribution and then convert the Traditional IRA into a Roth IRA. Since the Traditional IRA contribution was made after-tax there would be no tax on the Roth IRA conversion. This tactic was made possible when the IRS removed the income level restrictions for making Roth conversions in 2010.

Can I Make IRA contributions after age 70½

You can’t make regular contributions to a traditional IRA in the year you reach 70½ and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

To learn more about the self-directed IRA and self-directed Roth IRA contribution rules, please contact a self-directed IRA tax expert at 800-472-0646.

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Jul 05

Deductions You can Take from IRA Contributions if You Are Covered by a Retirement Plan at Work

For 2016, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced/phased out if your modified Adjusted Gross Income (“AGI”) is:

  • More than $98,000 but less than $118,000 for a married couple filing a joint return.
  • More than $61,000 but less than $71,000 for a single individual or head of household.
  • Less than $10,000 for a married individual filing a separate return.

Deductions You can Take from IRA Contributions if You Are Covered by a Retirement Plan at Work

If you either lived with your spouse or file a joint return and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $184,000 but less than $194,000 or more.

Please contact one of our IRA Experts at 800-472-0646 for more information.

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Apr 18

Today is the Last Day to Make 2015 IRA Contributions

Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your tax return for that year, not including extensions. For most people, this means that contributions for 2015 must be made by April 18, 2016.  You have until April 17, 2017 to make contributions for this year.

Today is the Last Day to Make 2015 IRA ContributionsThe maximum amount you can contribute for 2015 is $5,500 or $6,500 if you are age 50 or older.  The same limits apply for 2016.  Whatever amount you contribute will lessen your tax hit for the year.

Note: Contributions cannot be made to your traditional IRA for the year in which you reach the age of 70 and 1/2 or for any later year.

 

Please contact one of our IRA Experts at 800-472-0646 for more information.

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Oct 13

Self-Directed IRA Maximum Contribution Limits

The maximum contribution limit for a self-directed IRA for 2015 is $5,500 or $6,500 if you’re age 50 or older, or your taxable compensation for the year, if less. Contributions to a self-directed Roth IRA may be limited based on your filing status and income.

Contributions made to a self-directed IRA LLC must be made to the IRA administrator/custodian and may not be contributed directly to the LLC. Once the IRA contribution is made to the IRA administrator/custodian, the funds can then be transferred to the IRA LLC.

Is my IRA contribution deductible on my tax return?

If neither you nor your spouse is covered by an employer retirement plan, such as a 401(k), your deduction is allowed in full.

For contributions to a traditional IRA, the amount you can deduct may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. In the case of a Roth IRA, contributions aren’t deductible.

Can I contribute to a traditional or Roth Self-Directed IRA if I’m covered by a retirement plan at work?

Yes, you can contribute to a traditional and/or Roth self-directed IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan). If you or your spouse is covered by an employer-sponsored retirement plan, such as a 401(k) plan and your income exceeds certain levels, you may not be able to deduct your entire contribution.

Can I establish a self-directed IRA if only one spouse has earned income for the year?

Yes. If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return and cannot exceed the maximum IRA contributions for the year (for 2015 $5500 or $6500 if over the age of 50). It doesn’t matter which spouse earned the compensation.

How can I make a Roth IRA contribution if I earned too much money in 2015?

For 2015, if your modified adjusted gross income is below $181,000 and you file a joint return, you can make a Roth IRA contribution. For those who earned greater than $181,000 during the year, the IRS provides a formula, which will set forth the reduced maximum amount of Roth IRA contributions permitted for the year, if any.

One way to circumvent the Roth IRA income threshold rules, if to simply make an after-tax traditional IRA contribution and then convert the Traditional IRA into a Roth IRA. Since the Traditional IRA contribution was made after-tax there would be no tax on the Roth IRA conversion. This tactic was made possible when the IRS removed the income level restrictions for making Roth conversions in 2010.

Can I Make IRA contributions after age 70½

You can’t make regular contributions to a traditional IRA in the year you reach 70½ and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

To learn more about the self-directed IRA and self-directed Roth IRA contribution rules, please contact a self-directed IRA tax expert at 800-472-0646.

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Dec 18

Contributing to an IRA After a 401k Rollover

If you decide to rollover a 401(k) plan funds into an IRA (what is known as a rollover contribution), this does not effect your annual IRA contribution.  Plus, this keeps the tax benefits of deferred growth and puts all your retirement assets in one account making them easier to manage.

You may still contribute to an IRA after a 401(k) rolloverRollover contributions do not count towards your annual contribution limit of your IRA.  This would limit the amount of money you can rollover in a given year.  For example, the limit for IRA contributions for 2013 is $5,500 ($6,500 if you are at least age 50).  If you have $50,000 in your 401(k) plan that you wish to rollover, it would take a decade to move all the funds to your IRA.  Since annual limits don’t effect rollovers, you can move all your money into your IRA at one time.

Of course, regular IRA contribution applies no matter what, so not everyone is eligible to contribute to an IRA.  If you will turn age 70 1/2, before the end of the year, you are not allowed to contribute to an IRA.  Further, you need earned income during the year to contribute to an IRA.  If you did not work during the year, you cannot contribute to an IRA.  If you earned less than the maximum allowable contribution, you can only contribute up to that amount.

If you contribute to an IRA when you are not eligible to, or you contribute more than allowed for the year, you will get hit with a 6% penalty on the excess contribution by the IRS.  This penalty will be in effect every year until you fix the mistake.  Also, don’t forget if you have a Roth IRA as well, contributions to that account count towards the annual limit.  If you maxed out your contributions to your Roth, you cannot contribute to your traditional plan.

One last thing to note: if you plan on moving the money from your IRA to another employer-sponsored plan, you should not contribute to the account even though you are allowed.  When moving money from one employer plan to an IRA to another employer plan, you may receive additional tax benefits.  This type of IRA is known as a “conduit IRA”.  If you contribute additional money into this type of IRA, it makes it ineligible for any additional benefits.

If you have any questions about this or other IRA matter, please contact a tax expert from the IRA Financial Group @ 800.472.0646 today!  Be sure to check us out on Twitter and Facebook!