IRA Contributions

In an era where pensions are few and far between, and future Social Security benefits are in question, it’s important for individuals and their families to save for their own retirement savings. A great and simple way to save for your retirement (with potential tax savings) is through an Individual Retirement Account (IRA).

Traditional VS. Roth IRA

For eligible taxpayers, the traditional IRA offers a current tax savings opportunity in the form of a tax deduction for the amount of your contribution. Future withdrawals of traditional IRA principal and earnings are taxed at ordinary income tax rates. Roth IRA contributions are not deductible, but qualified withdrawals are tax-free. Roth IRAs offer the advantage of tax-free growth.

Rules, Eligibility, and Limitations for IRAs

Traditional and Roth IRAs have the following rules and limitations:

  • For tax year 2018, the maximum contribution to Traditional and Roth IRAs combined is $5,500 per individual under age 50 and $6,500 per individual age 50 or older.
  • For tax year 2019, the maximum contribution to Traditional and Roth IRAs combined is $6,000 per individual under age 50 and $7,000 per individual age 50 or older.
  • Taxpayers age 70.5 and over are not eligible to contribute to traditional IRA, but Roth contributions are still an option.
  • Contributions are limited to taxable compensation for the year. For married-filing-joint taxpayers, one spouse’s taxable compensation may allow a spouse without sufficient taxable compensation for the year to contribute to their own IRA.
  • You can withdraw your money at any time, though non-qualified withdrawals (generally distributions prior to age 59.5) may incur tax and penalties. There are certain exceptions to the age 59.5 rule; consult your tax advisor or visit for more on the exceptions.


Depending on your filing status, your income level, and whether you or your spouse are covered by a retirement plan at work, deductible traditional contributions and Roth contributions may be limited or completely phased out. For example, a married couple with 2018 income over $199,000 cannot contribute to a Roth IRA for tax year 2018, nor can either deduct traditional IRA contributions if one spouse is covered by a plan. Visit for the different income limitations based on your filing status and plan coverage.

Is your income too high to contribute to Roth or deduct an IRA contribution? Consider a non-deductible IRA contribution. Ask your advisor whether a “back-door Roth IRA” may make sense for you.

How DHJJ Financial Advisors Can Help

Don’t let another year go by without contributing to your IRA or Roth, if you are able. Ask your financial advisor or tax professional to assist in the specifics of your eligibility, including whether a traditional or Roth makes more sense for you should you qualify for both. Contact DHJJ Financial Advisors at 630-420-1360 or fill out the form below.