If our income is low enough, we will be able to deduct our traditional IRA contribution from our 2023 taxable income. Image: Dilok Klaisataporn/Shutterstock.com
By: John GrobeDid you know that from January 1st through April 18th you can contribute to both 2023 and 2024 Individual Retirement Arrangements (IRAs)?
The laws regarding IRAs provide that we can make a “prior year” contribution up until the due date of our tax return for the year in question. As 2023 federal income tax returns are due on April 18, 2024, we have until that date to make a 2023 contribution. Plus, we can make a 2024 IRA contribution beginning January 1, 2024. So, for a period of over 3 ½ months we can contribute for both years. The ability to make prior year contributions can help us if we have not set enough aside this year to fully fund our IRA.
If our income is low enough, we will be able to deduct our traditional IRA contribution from our 2023 taxable income. Because we belong to a retirement plan through work the following restrictions apply to our ability to deduct contributions to a traditional IRA.
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
If our income is above these levels, we can still contribute to a traditional IRA, we just can’t deduct our contributions.
On the other hand, we could make a prior year contribution to a Roth IRA if our 2023 income is below the following amounts. If your income is above these levels, you cannot contribute to a 2023 Roth IRA.
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
Be aware that prior year contributions are only for IRAs, they do not apply to the Thrift Savings Plan.
Did you know? that in its 2023 Retirement Confidence Survey, the Employee Benefits Research Institute found that:
· Almost 60% of retirees reported that their retirement account balances decreased over the past 12 months; and
· Two-thirds worry that the increase in cost of living will make it more difficult to save money; and
· 58% are concerned that they will have to make substantial cuts in their spending.
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.
More Than a Third of Those Eligible under GPO-WEP Repeal Getting Back Payments, Says SSA
Retention Standing, ‘Bump and Retreat’ and More: Report Outlines RIF Process
House Budget Plan May Put Federal Employee Benefits on Table for Cuts
Budget Options Document Targets Retirement, Health Insurance, Other Benefits
Deferred and Postponed Annuities Under CSRS and FERS
Get Your Official Personnel Folder in Order to Max Out Benefits
