Are You Maximizing Your IRA Contributions for 2023?

If you did not have time before, make sure that you review your IRA contribution for 2023.  Tax advantaged IRA accounts are one of the most popular ways to build a sufficient nest-egg for your future. By opening an IRA or contributing to your existing account before the April 15^th filling deadline, you can be sure to save up for a comfortable retirement and potentially reduce your taxes.

(Note: April 15, 2024 falls on Patriots Day and April 16 falls on Emancipation Day. As such, the April 15 IRA contribution and tax filing deadlines are extended to Wednesday, April 17, 2024 for residents of Maine and Massachusetts).

In determining your ability to contribute to a Roth IRA or your ability to make a deductible traditional IRA contribution, you will need to know the amount of your Modified Adjusted Gross Income (MAGI). MAGI is calculated by taking your Adjusted Gross Income (AGI) and adding back certain items such as foreign income, foreign housing deductions, student loan deductions, IRA contribution deductions, and deductions for higher education costs. Please note that Roth IRA conversion amounts are generally excluded from MAGI.  You can meet with an Oppenheimer financial professional who can help you optimize your IRA savings strategy.

A Roth IRA permits individuals who have earned income to save money on a tax deferred basis. Contributions are not tax deductible, but qualified distributions from the Roth IRA, including any distribution of earnings, are generally tax-free. Contributions may be returned tax and penalty-free at any time.

• Roth IRA Contribution limits:
  • 2023: $6,500
  • 2024: $7,000
• Roth IRA Contribution limits for those 50+:
  • 2023: $7,500 (Catch-up is $1,000 for those 50+).
  • 2024: $8,000 (Catch-up is $1,000 for those 50+).
• Important notes: Individuals interested in making a Roth IRA contribution must adhere to the adjusted gross income limitations for single individuals and married individuals, and must have earned income that is at least equal to the contribution amount.

A traditional IRA allows individuals who have earned income to save money on a tax deferred basis. Contributions may also be tax deductible, depending on if the contributor (or their spouse) is covered by an employer’s plan, or by their level of Modified Adjusted Gross Income.  Individuals must have earned income that is at least equal to the contribution amount.

• IRA Contribution limits:
  • 2023: $6,500
  • 2024: $7,000
• IRA Contribution limits for those 50+:
  • 2023: $7,500 (Catch-up is $1,000 for those 50+).
  • 2024: $8,000 (Catch-up is $1,000 for those 50+).

Understanding IRA contribution limits and deadlines is crucial for effective retirement planning. Contributing the maximum allowable amount to your IRA each year can help you build a substantial nest egg for retirement while taking advantage of potential tax benefits. Read more about IRS contribution limits for 2023 and 2024 here.

Consult with an Oppenheimer financial professional to determine the best strategy for maximizing your retirement savings while staying within IRS guidelines. Being aware of the contribution limits and deadlines for traditional and Roth IRAs is essential for effective retirement planning. By making informed decisions and taking advantage of available tax benefits, you can work towards securing a financially stable retirement future.