There’s still time to make a regular IRA contribution for 2013!
You have until your tax return due date (not including extensions) to contribute up to $5,500 for 2013 ($6,500 if you were age 50 by December 31, 2013). For most taxpayers, the contribution deadline for 2013 is April 15, 2014.You can contribute to a traditional IRA, a Roth IRA, or both, as long as your total contributions don’t exceed the annual limit. You may also be able to contribute to an IRA for your spouse for 2013, even if your spouse didn’t have any 2013 income.
Contributions are subject to income threshold limits, which are outlined below.
Traditional IRA
You can contribute to a traditional IRA for 2013 if you had taxable compensation and you were not age 70½ by December 31, 2013. However, if you or your spouse was covered by an employer-sponsored retirement plan in 2013, then your ability to deduct your contributions may be limited or eliminated depending on your filing status and your modified adjusted gross income (MAGI) (see table below). Even if you can’t deduct your traditional IRA contribution, you can always make nondeductible (after-tax) contributions to a traditional IRA, regardless of your income level. However, in most cases, if you’re eligible, you’ll be better off contributing to a Roth IRA instead of making nondeductible contributions to a traditional IRA.
These tables show whether your contribution to a traditional IRA is eligible as a deductible contribution.
| Covered by employer-sponsored plan, filing as… | And your Modified AGI is… | Then You Can Take… |
| Single or head of household | $59,000 or less | a full deduction up to the amount of your contribution limit |
| less than $69,000 | a partial deduction | |
| $69,000 or more | no deduction | |
| Married, filing jointly, or qualifying widow(er) | $95,000 or less | a full deduction up to the amount of your contribution limit |
| less than $115,000 | a partial deduction | |
| more than $115,000 | no deduction | |
| Married, filing separately | $10,000 or less | a partial deduction |
| $10,000 or more | no deduction |
|
Not covered by employer-sponsored plan, but filing joint return with a spouse who is covered by a plan, and filing as… |
And your Modified AGI is… | Then you can take… |
| Married, filing jointly, with a spouse covered by work plan | $178,000 or less | a full deduction up to amount of your contribution limit |
| less than $188,000 | a partial deduction | |
| more than $188,000 | no deduction | |
| Married, filing separately with a spouse covered by a work plan | $10,000 or less | a partial deduction |
| $10,000 or more | no deduction |
Note: If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the ‘Single’ filing status.
Roth IRA
You can contribute to a Roth IRA if your modified adjusted gross income (MAGI) is within certain dollar limits (even if you’re 70½ or older). For 2013, if you file your federal tax return as single or head of household, you can make a full Roth contribution if your income is $112,000 or less. Your maximum contribution is phased out if your income is between $112,000 and $127,000, and you can’t contribute at all if your income is $125,000 or more. Similarly, if you’re married and file a joint federal tax return, you can make a full Roth contribution if your income is $178,000 or less. Your contribution is phased out if your income is between $178,000 and $188,000, and you can’t contribute at all if your income is $188,000 or more. If you’re married filing separately, your contribution phases out with any income over $0, and you can’t contribute at all if your income is $10,000 or more.
This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.
| If your filing status is… | And your Modified AGI is… | Then you can take… |
| Married, filing jointly or qualifying widow(er) | less than $178,000 | up to the limit |
| less than $188,000 | a reduced amount | |
| more than $188,000 | zero | |
| Married, filing separately, and you lived with your spouse at any time during the year | less than $10,000 | a reduced amount |
| $10,000 or more | zero | |
| Single, head of household, or married, filing separately and you did not live with your spouse at any time during the year | less than $112,000 | up to the limit |
| less than $127,000 | a reduced amount | |
| more than $127,000 | zero |
Even if you can’t make an annual contribution to a Roth IRA because of the income limits, there’s an easy workaround. If you haven’t yet reached age 70½, you can simply make a nondeductible contribution to a traditional IRA, and then immediately convert that traditional IRA to a Roth IRA. Keep in mind, however, that you’ll need to aggregate all traditional IRAs and SEP/SIMPLE IRAs you own – other than IRAs you’ve inherited – when you calculate the taxable portion of your conversion.
Finally, keep in mind that if you make a contribution to a Roth IRA for 2013, and this is your first Roth IRA contribution, your five-year holding period for identifying qualified distributions from all your Roth IRAs (other than inherited accounts) will start on January 1, 2013.
Even if you can’t make a contribution, be sure to think of family members or friends who might benefit from this information. We encourage you to CONTACT US with questions.
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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014.
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