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IRA Contributions for 2020 Thumbnail

IRA Contributions for 2020

Individual Retirement Accounts, IRAs for short, are a valuable long-term planning tool as you plan for your income in retirement.  In this post, we’ll cover three learning objectives

  1.  How much can you contribute to an IRA each year?
  2.  When can you make the contributions?
  3.  How to use “spousal” IRA contributions?

Before getting into the details, a reminder that there are detailed resources regarding IRA contributions at the Internal Revenue Service website and Forbes. Links are provided below to visit these sites.

Internal Revenue Service    

For 2020 and 2021, the contribution limits are the same.  The limits are also the same for both Traditional and Roth IRAs.  The decision to contribute to one type of IRA or the other may be based on your level of income and participation by you or your spouse in an employer sponsored retirement plan.  We’ll cover some of these details later in this post.

Roth & Traditional IRA Contribution Limits



Age 49 Under

Up to $6,000

Up to $6,000

Age 50 & Older

Additional $1,000

Additional $1,000

To contribute to your IRA, you must have earned income in that year of at least as much as the IRA contribution amount.  However, a working spouse may contribute to the IRA of a non-working spouse up to the limits specified above as long as the working spouse has at least as much earned income as the total of all IRA contributions for that year and you file a joint tax return.  You can read more about spousal IRA contributions at the site linked below.

Investopedia - Spousal IRA Contributions 

IRA contributions may be made between January 1st of a particular calendar year until the tax filing deadline for that year, which is generally April 15th of the following year.  Contributions can be made in a lump-sum or contributed in smaller deposits through the year.  Many IRA owners set up a monthly direct deposit in order to make automatic contributions during their working years.  Filing for an extension of time to file your federal tax return does not extend the deadline for IRA contributions.

Many Americans participate in an employer sponsored retirement plan like a 401K, 403B or SIMPLE IRA.  Self-employed individuals may use a Solo-401K or a SEP-IRA to be able to maximize contributions to these tax-deferred investment plans and realize immediate tax savings.

If you or your spouse are a participant in one of these qualified plans, or are high wage earners, it can complicate the choice of what type of IRA to contribute to and may reduce or eliminate your tax deduction for contributions to a Traditional IRA.

In summary, individuals and married couples with earned income can take advantage of IRAs for accumulating retirement savings.  The question is which type of IRA will offer you the best tax advantage for your personal situation.  Click Here for a link to a blog post at Wealth Her Way, a site we sponsor as an educational resource for women, that covers the differences between Traditional and Roth IRAs.  

If you have questions about IRA contribution limits, you should contact us at 941-778-1900 or email us at: info@integracapitaladvisors.com.