If you can afford it, Think about contributing to an IRA in addition to the contributions you make to your TSP. You’ll thank yourself later. Image: Vitalii Vodolazskyi/Shutterstock.com
By: John GrobeSome of us might be able to deduct contributions to traditional Individual Retirement Arrangements (IRAs) from our federal income tax. Because we federal employees are covered by a retirement plan at work (YAY!), our income must be below a certain level to be able to deduct the contributions. For 2023 tax purposes (2024 amounts are higher and can be found on the IRS website), the income limits are:
Single filing status
Full deduction allowed if income is below $73,000
Partial deduction allowed if income is between $73,000 and $83,000
No deduction allowed if income is over $83,000
Joint filing status if spouse also belongs to a retirement plan at work
Full deduction allowed if income is below $116,000
Partial deduction allowed if income is between $116,000 and $136,000
No deduction allowed if income is over $136,000
Joint filing status if spouse does not belong to a retirement plan at work
Full deduction allowed if income is below $218,000
Partial deduction allowed if income is between $218,000 and $228,000
No deduction allowed if income is over $228,000
Note that, even if our own income is over the above thresholds, if our joint income falls below the joint filing status numbers, we can deduct contributions to an IRA for our spouse.
We do not have to actually contribute to the IRA before we file our federal income tax return. We do, however, need to contribute to the IRA before the filing deadline (April 15th in 2024). This is true even if you have an extension to file your taxes. Some taxpayers who file their returns early are able to fund their IRA contributions with their tax return. Just be sure that you meet the deadline.
If we are unable to deduct our contributions to a traditional IRA that doesn’t stop us from making them. No matter how high our income is, we can contribute to a traditional IRA; even Warren Buffet can do so.
But Warren Buffet can’t contribute to a Roth IRA because there are income limits as to who can contribute.
Here are the 2023 income limits on contributing to a Roth:
Single filing status
Full contribution allowed if income is below $138,000
Partial contribution allowed if income is between $138,000 and $153,000
No contribution allowed if income is over $153,000
Joint filing status
Full contribution allowed if income is below $218,000
Partial contribution allowed if income is between $218,000 and $228,000
No contribution allowed if income is over $228,000
If you can afford it, Think about contributing to an IRA in addition to the contributions you make to your TSP. You’ll thank yourself later.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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See also,
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How Your FERS, Social Security and TSP Payments Get Taxed
