Almost anyone can set up a traditional IRA. The only requirement is that you generally must have taxable compensation (typically, salary or wages from your job) in order to put money into an IRA. Beyond that, the basic mechanics of setting up an IRA are pretty straightforward.
An IRA is typically established with a bank, insurance or investment company, or other financial institution, with an initial investment of as little as $50. It’s as simple as picking an institution, completing the required paperwork, and making an opening deposit. The only potentially difficult steps are selecting specific investment vehicles to fund your IRA and designating your beneficiary.
You can contribute a total of $7,000 to all the IRAs you own (traditional and Roth) in 2024 ($6,500 in 2023). Married couples may contribute $7,000 per spouse under certain conditions, even if one spouse has little or no income. In addition, if you’re age 50 or older, you can make an extra “catch-up” contribution of $1,000 in 2024 (and 2023). Your annual contribution can be made as a lump-sum payment or a series of payments, and can be made up until the due date of your federal return (generally April 15 of the following year).
Although practically anyone with earned income can contribute the full $7,000 to an IRA in 2024, your ability to deduct contributions will depend on several factors (e.g., your adjusted gross income, your tax filing status, and whether you or your spouse is covered by an employer-sponsored plan). You may be able to deduct all, a portion, or none of your IRA contribution for a given tax year. You may even qualify for a partial tax credit.
Note that this discussion applies only to traditional IRAs. Roth IRAs are subject to special rules of their own.
IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021.