An IRA contribution refers to the amount you can deposit into an IRA each year, either personally or through an employer-sponsored plan. Contributions can be made via check, wire transfer, or cash, and there are specific rules and requirements for each type of IRA. Contributing to an IRA is optional and not mandatory every year.
Each type of self-directed IRA has its own annual contribution limit and deadline, set by the IRS. These limits, updated annually, apply to traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, individual 401(k) plans, HSAs, and ESAs. For detailed information on each account's contribution limits, see the sections below.
|Single Active Participant||$73,000 to $83,000||$77,000 to $87,000|
|Married Active Participant, Filing Joint Tax Return||$116,000 to $136,000||$123,000 to $143,000|
|Married Active Participant, Filing Separate Tax Returns||$0 to $10,000||$0 to $10,000|
|Spouse of an Active Participant||$218,000 to $228,000||$230,000 to $240,000|
|Single Individuals||$138,000 to $153,000||$146,000 to $161,000|
|Married, Filing a Joint Tax Return||$218,000 to $228,000||$230,000 to $240,000|
|Married, Filing Separate Tax Returns||$0 to $10,000||$0 to $10,000|
|Employee Elective Deferrals||$15,500||$16,000|
|Catch-Up Elective Deferral Contribution Age 50+||$3,500*||$3,500*|
|Your employer can elect from two different contribution methods. Check with your employer which option they have chosen. Employer contributions are in addition to your elective deferrals.|
SEP employer contribution limits cannot exceed:
1. Up to 25% of compensation, or
|SEP Employer Contribution Limits||Up to 25% of compensation, with a maximum of $66,000||Up to 25% of compensation, with a maximum of $69,000|
|SEP Current Year Minimum Compensation Required||$750||$750|
|Employer Contributions||Up to $66,000||Up to $69,000|
|Employee Elective Deferrals||Up to $22,500||Up to $23,000|
|Catch-Up Elective Deferral Contribution Age 50+||Up to $7,500||Up to $7,500|
|The employer can contribute up to the smaller of 25% of your compensation up to the maximum limit. Employer contributions and employee elective deferrals in aggregate may not exceed $66,000 for 2023 and $69,000 for 2024. Compensation limits and deductibility apply, so contact your employer for further information|
|High Deductibles/Out-of-Pocket Limits|
|Single Coverage - Minimum/Maximum||$1,500/$7,500||$1,600/$8,050|
|Family Coverage - Minimum/Maximum||$3,000/$15,000||$3,200/$16,100|
|Health Savings Account Contribution Limits|
|Plus a $1,000 catch-up contribution if you are age 55+|
Annual limit until the child is age 18, though this age limit may be extended if the child has special needs.
Contributions limits may vary annually, depending on the type of account you have. The IRS releases new contribution limits for all plans including traditional IRAs, Roth IRAs, SEP and SIMPLE plans, ESAs, and HSAs every year. Check out the current contribution limits here.
If neither you nor your spouse is covered by a retirement plan at work, 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.
You may want to consult with a tax professional to determine if your traditional IRA contribution is tax-deductible. Roth IRA contributions aren’t deductible.
Yes, you can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP IRA or SIMPLE IRA plan).
Participation in an employer plan only affects the deductibility of your traditional IRA contribution.
If you file a joint return and have taxable compensation, you and your spouse can both contribute to your own separate IRAs.
The maximum contribution you may contribute for each of your IRAs will be based on the annual limit or the amount of your earned income for the year, whichever is smaller. If you file a joint return you may both use your combined income to determine the amount you can contribute. Check out the current contribution limits here.
Yes, most SEPs require you to make allocations proportional to your employees' salary/wages. This means that everyone’s contribution is the same percentage of salary.
Yes, you can make regular IRA contributions (including IRA catch-up contributions if you are age 50 and older) to your SEP IRA. However, the deductibility of your IRA contribution may be reduced or eliminated due to your participation in the SEP plan depending on your income for the year.
No, SEPs are funded by employer contributions only. Catch-up contributions apply only to employee elective deferrals.
No, you are not required to contribute every year. Contributions to a SEP plan are discretionary meaning you can decide every whether you wish to make a contribution or not.
Yes, you do, if they are otherwise eligible to receive a contribution. A SEP cannot have a last-day-of-the-year employment requirement. If the employee is otherwise eligible, they must share in any SEP contribution. This includes eligible employees who died during the year as well.
Yes, you must contribute for each employee eligible to participate in your SEP, even if they are over age 70½. However, the employee is subject to required minimum distributions.
The most you can deduct on your business’s tax return for contributions to your employees’ SEP IRAs is the lesser of your contributions or 25% of each eligible employee's compensation.
No, contributions to employees’ SEP IRAs are not included in their gross income.
Each eligible employee may make a salary reduction contribution and the employer must make either a:
No other contributions may be made under a SIMPLE IRA plan.
A salary reduction contribution is an amount an employee elects to have contributed to his or her SIMPLE IRA, rather than paid in cash. Employers must permit their employees to elect to have salary reduction contributions made at an employee-specified level, expressed as a percentage of compensation for the year or as a specific dollar amount. An employer may not place any restrictions on the amount of an employee's salary reduction contributions, except to comply with the annual limit on salary reduction contributions.
No, you cannot suspend or modify your employer matching contributions mid-year. You must make the contributions that you promised your employees before the beginning of the year through a notice.
Yes, you do. A SIMPLE IRA plan cannot have a last-day-of-the-year employment requirement. If the employee is otherwise eligible, they must share in any SIMPLE IRA contribution. This includes eligible employees who die or quit working before the contribution is made.
Yes, in fact, you must. Employees may not be excluded from participating in a SIMPLE IRA plan based solely on their age.
You must make matching and nonelective contributions to the financial institution maintaining the SIMPLE IRA no later than the due date for filing your business's income tax return, including extensions.
You may deduct all contributions made to your employees' SIMPLE IRAs on your tax return.
There are no mandatory contributions required.
Businesses whose only eligible employees are the owner(s) and their spouse(s).
Yes, salary deferral and profit sharing contributions are generally 100% tax-deductible.
Anyone covered under an eligible high-deductible health plan (HDHP) may contribute to an HSA.
You cannot be enrolled in Medicare or any other health coverage that is not permitted by the IRS. See publication 969.
You can keep your HSA account at any age, but you can no longer make new contributions to the account after you have signed up for Medicare Part A or Medicare Part B.
For most individuals, this means you will no longer be eligible when you turn 65. You lose eligibility as of the first day of the month you turn 65.
You may make a full year’s contribution to the HSA, even if you are eligible for only part of the year. If you make a contribution for the full year when you only had partial-year HSA eligibility, you must remain HSA-eligible through the last month of the following calendar year to avoid taxes and penalties.
If you are changing the amount contributed via payroll on a pre-tax basis, check with your employer. You can change the amount you contribute to your HSA at any time during the plan year.
Contributions to HSAs can be made by you, your employer, or both. All contributions are aggregated to determine whether you have contributed the maximum allowed. Additionally, family members may make contributions on behalf of other family members as long as the other family member is an eligible individual.
Yes, individuals 55 and older who are covered by an eligible HDHP can make additional catch-up contributions each year until they
Parents, grandparents, other relatives, friends, and the child for whom the account is being established can contribute to a Coverdell ESA. Entities who wish to contribute may do so as well.
No, ESA contributions are not tax-deductible, but all qualified withdrawals used for education expenses are 100% tax-free.
Yes, a student may have multiple ESAs but the maximum combined contribution for the individual is $2,000 per year.