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Making a 2023 IRA Contribution? Here Are 4 Rules That May Surprise You! Thumbnail

Making a 2023 IRA Contribution? Here Are 4 Rules That May Surprise You!

The tax season is upon us. This is the time when many individuals fund their IRAs by contributing for the prior year. Contributing to an IRA may seem pretty straightforward, and in many ways, it is! But there can be twists. Here are four rules that may surprise you when you make your 2023 IRA contribution.

Making a 2023 IRA Contribution? Here Are 4 Rules That May Surprise You!

1. File first and fund later. 

Frequently, during tax season we are asked if an IRA contribution must be made before the tax return is filed. The answer is no. This is not required. You can claim a deduction for your 2023 IRA contribution now when you file your taxes and fund it later. Some people even fund their IRA contribution with their tax refund if the timing is right. Just don’t wait too long. If you claim the contribution, be sure you get it done before the deadline (see #4 below).

2. Spousal contributions can help.

Not working outside the home doesn’t necessarily count you out when it comes to saving for retirement by making a 2023 IRA contribution. If your spouse has taxable compensation for the year, you can make a spousal contribution to your IRA based on your spouse’s taxable compensation. Yes, you can still build your retirement savings as a stay-at-home spouse.

3. No age limits for IRA contributions.

Think you are too old to contribute to an IRA? It’s time to reconsider. The rules have changed. It used to be that contributions were not permitted to a traditional IRA once you reached the year you turned age 70 ½, but the SECURE Act did away with this restriction.  There have never been age limits for Roth IRA contributions. The bottom line is that you can be any age and make a 2023 contribution to either a traditional IRA or Roth IRA. This could be helpful for those who work part time in retirement and do not need the income.

4. No extensions for IRA contributions. 

You may be able to get more time to file your taxes but that will not help you with your IRA contribution. The deadline for making your 2023 traditional or Roth IRA contribution is April 15, 2024. This is true even if you have an extension of time to file your taxes.

By Sarah Brenner, JD
Director of Retirement Education
Ed Slott and Company, LLC

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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.

Copyright © 2024, Ed Slott and Company, LLC Reprinted from The Slott Report, 02/21/24, with permission. https://www.irahelp.com/slottreport/making-2023-ira-contribution-here-are-4-rules-may-surprise-you-0, Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article. 
Investment advisory services offered through Mutual Advisors, LLC DBA California Retirement Advisors, a SEC registered investment advisor. Securities offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Securities, Inc. and Mutual Advisors, LLC are affiliated companies. CA Insurance license #0B09076. This content is developed from sources believed to be providing accurate information and provided by California Retirement Advisors. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. California Retirement Advisors, nor any of its members, are tax accountants or legal attorneys and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional.