It’s not too late to make contributions to your traditional or Roth IRA for the 2021 tax year. Contributions made up until April 18, 2022, may be deducted from your 2021 tax return. Any contributions to a traditional or Roth IRA made until the April 18 filing date must be designated for 2021 to the financial institution.
In general, individuals can contribute up to $6,000 to an Individual Retirement Arrangement in 2021. For those 50 years and older at the end of 2021, the limit is $7,000. Qualified contributions to one or more traditional IRAs may be deductible up to the contribution limit of 100% of the taxpayer’s compensation, whichever is less. There is no longer a maximum age for making IRA contributions.
Those who make contributions to certain employer retirement plans, such as a 401k or 403(b), an IRA, or an Achieving a Better Life Experience (ABLE) account, may be able to claim the Saver’s Credit. Also known as the Retirement Savings Contributions Credit, the amount of the credit is generally based on the amount of contributions, the adjusted gross income and the taxpayer’s filing status. The lower the taxpayer’s income (or joint income, if applicable), the higher the amount of the tax credit. Dependents and full-time students are not eligible for the credit.
While contributions to a Roth IRA are not tax deductible, qualified distributions are tax-free. Roth IRA contributions may be limited based on filing status and income. Contributions can also be made to a traditional and/or Roth IRA even in participating in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA-based plan).
Our team is here to provide you tax-saving advice and plan ahead for the coming year. To learn more about our partners with Antares Wealth Management please visit here.