Do you want to retire comfortably? Your IRA can play a big part in your ability to enjoy this season of life. Because this financial resource is one you’re solely responsible to fund, understand four IRA contribution facts for 2015 as you prepare for the future.
1. Contribute the Maximum Amount
Contribution limits from 2014 remain the same in 2015, so plan to save the maximum amount. If you’re under 49 years old, contribute up to $5,500. If you’re over 50, contribute $6,500.
2. Consider Your Birthday
Will you turn 70.5 years old this year? If so, you won’t be able to contribute to your traditional IRA. Roth IRAs don’t cap contributions based on your age. Think about your birthday and the type of IRA you own as you maximize your retirement savings.
3. Track Your Income
No matter how old you are or which type of IRA you have, your modified adjusted gross income (AGI) can decrease the amount of money you can contribute.
Contribute the maximum amount if you file a joint tax return and your modified AGI is less than $183,000 or if you’re single and earn less than $116,000.
Contribute a reduced amount if you file a joint tax return and your modified AGI falls between $183,000 and $193,000, if you’re married but file separately and your modified AGI is under $10,000 or if you’re single with a modified AGI between $116,000 and $131,000.
You can’t contribute anything to your IRA if you file jointly and your modified AGI is greater than $193,000, if you’re married filing separately and have a modified AGI greater than $10,000 or if you’re single and your modified income exceeds $131,000.
With this information, you’re better able to plan a retirement savings strategy that’s right for you.
4. Think About Your Taxes
Your IRA contributions this year can impact your tax obligations for 2016 and beyond. Add money to your traditional IRA between now and April 15, 2016, and deduct the full amount on your 2015 tax return. You’ll pay taxes on the withdrawals you receive from a traditional IRA when you retire, though. A Roth IRA features no tax deductions now, but you won’t owe taxes on distributions during your retirement years.
Understanding these four 2015 IRA contribution facts assists you in preparing for your future. In addition to investing in your employer-sponsored 401(k), consider opening an IRA as you save for a comfortable retirement.
