There is still time! You can still make a prior-year (2024) IRA or Roth IRA contribution up to the tax filing due date, April 15, 2025. For most people, there is no extension beyond that date, regardless of whether a tax return extension is filed.
While April 15 is the deadline to contribute to an IRA for most individuals for the prior year, if you live in a federally declared disaster area you may be given additional time by the IRS to complete certain tax-related acts, such as making an IRA contribution. This year, those taxpayers impacted by the California wildfires have until October 15, 2025, to make a 2024 prior-year IRA contribution. An up-to-date list of disaster victims entitled to tax relief can be found on the IRS’s website: irs.gov/newsroom/tax-relief-in-disaster-situations.
Contribution Limit
The maximum contribution is $7,000. However, if you are age 50 or older by December 31, 2024, you can contribute an additional $1,000. This total amount is applied in aggregate across all of your traditional and Roth IRAs. Note that IRA contributions have no bearing on how much you can contribute to a workplace plan such as a SEP IRA, SIMPLE IRA or a 401(k).
Compensation
IRA and Roth IRA contributions are only permitted when you have compensation. Typically, whether or not a person has “compensation” is a relatively straightforward determination. For most individuals, compensation comes from employment, either as an employee or from self-employment income. Confirmation of “compensation” can be found in Box 1 of your W-2 form. Any amount listed here (minus any amount listed in box 11) qualifies as “compensation.”
As is often the case with IRAs, special rules exist for spouses when it comes to compensation. A spouse with little or no compensation can make an IRA contribution based on the other spouse’s compensation. If the higher-compensated spouse had enough eligible income, both spouses can make the maximum IRA contribution. Note that you must file a joint tax return for the year to qualify for a spousal contribution.
Deductibility
A traditional IRA contribution is not always deductible. (Roth IRA contributions are never deductible.) One factor for determining IRA deductibility is if you are an “active participant” (i.e., “covered”) in a retirement plan at work. This can be confirmed by checking Box 13 on your W-2. If neither you or your spouse have a retirement plan through an employer, then neither of you is an “active participant” and you each can deduct a traditional IRA contribution. It does not matter what your income is. Single filers not participating in an employer plan also qualify for a deductible IRA contribution without regard to their income.
If you are an active participant in an employer plan, you must consider the phase-out ranges for traditional IRA deductibility. As mentioned, while you can always make a traditional IRA contribution, you may not be able to deduct it. For 2024 IRA contributions, the income phase-out ranges for deductibility were $123,000 – $143,000 of modified adjusted gross income (MAGI) for those married/filing joint, and $77,000 – $87,000 for single filers. (In 2025, those numbers move to $126,000 – $146,000 and $79,000 – $89,000, respectively.)
There is another IRA deductibility phase-out range when one spouse participates in an employer plan and the other spouse does not. The participating spouse uses the married/filing joint phase-out ranges just listed. The non-participating spouse is permitted a higher phase-out range of $230,000 – $240,000 for 2024 ($236,000 – $246,000 for 2025).
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
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