Did you forget to make an IRA contribution last year? Or maybe you didn’t have the extra funds available but now you do?
If you haven’t made a contribution to your traditional or Roth IRA for last tax year, it’s still not too late.
The IRS said that taxpayers have until April 17 to make a contribution to an IRA or Roth IRA and claim it on their 2017 tax returns. Doing so might mean they are eligible for a credit or deduction.
Contributions to a traditional IRA are often tax deductible, but distributions are generally taxable. Contributions to a Roth IRA are not deductible, but qualified distributions are tax-free. The IRS also said that low- and moderate-income taxpayers making these contributions may also qualify for the Saver’s Credit.
Eligible taxpayers can contribute up to $5,500 to an IRA according to IRS guidelines. For someone who was 50 years of age or older at the end of 2017, the limit is increased to $6,500.
These guidelines generally apply to Roth IRAs as well, however, Roth contributions are subject to income limits. The maximum permitted amount of Roth IRA contributions is phased out for taxpayers whose modified adjusted gross income is above a certain level:
- $0 to $10,000; married filing separately
- $118,000 to $133,000; single and head of household
- $186,000 to $196,000; married filing jointly
For detailed information on contributing to either Roth or Traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A on the IRS website.
Can I Contribute to Both an IRA and the TSP?
FedSmith.com author and federal retirement expert John Grobe addressed this question in a previous post. “If you can afford to contribute to both the TSP and an IRA, you should,” Grobe told federal employees who may be wondering if they can do both to boost their retirement savings.
The TSP has confirmed it as well in their FAQ’s about TSP and IRA accounts.
“Your participation in the TSP does not affect your eligibility to contribute to an IRA. However, the Internal Revenue Code (IRC) establishes limits on the dollar amount that you can contribute to eligible employer plans like the TSP and to individual retirement accounts such as traditional IRAs and Roth IRAs,” according to the TSP.
Be sure to consult a tax professional for assistance and advice with your personal tax situation.