IRA Contributions and Deductions

From SunAmerica Asset Management, LLC

Who Can Contribute?

Eligibility Requirements for Traditional, SEP and SIMPLE IRAs

IRA type

Contribution Requirements

Employer

Investor or Employee

Traditional IRA

N/A

Anyone who earns taxable income and is under age 70½

SEP IRA

Any self-employed individual with income, or any business owner with one or more employees

N/A

SIMPLE IRA

Any business owner with 100 or fewer employees earning at least $5,000 in compensation

Employees who received at least $5,000 in compensation during any two years prior to the current year and is expected to receive at least $5,000 in the current year.

 

Eligibility Requirements for Roth IRAs

You can make a contribution only if you meet the following income requirements:

Filing status

Modified Adjusted Gross Income (AGI)

Eligibility

Single or head of household

Less than $117,000

Full contribution

At least $117,000 but less than $132,000

Partial contribution

$132,000 or more

No contribution

Married filing jointly or qualifying widower

Less than $184,000

Full contribution

At least $184,000 but less than $194,000

Partial contribution

$194,000 or more

No contribution

Married filing separately

$0

Full contribution

More than $0 but less than $10,000

Partial contribution

$10,000 or more

No contribution

Note: If you file separately and did not live with your spouse at any time during the year, your Roth IRA eligibility is determined under the "Single" filing status.

 

Annual Contribution Limits

Traditional and Roth IRAs

IRA type

Maximum contribution

Catch-up contribution
(Age 50 or older)

Traditional IRA

$5,500

$1,000

Roth IRA

$5,500

$1,000

 

SIMPLE IRAs

Employer

Employee

Required Annual Contribution

Maximum

Catch-up contribution

(Age 50 or older)

Must contribute for each eligible employee either:

1. 2% of employee compensation (up to $265,000); or
2. Dollar-for-dollar matching contribution of up to 3% of employee compensation (3% may be reduced 2 out of every 5 years, but not to a percentage less than 1%)

 

$12,500

$3,000

 

SEP IRAs

Maximum Employer Contribution

Employee Elective Deferrals and Catch-up Contribution
(Age 50 or older)

Lesser of $53,000 or 25% of up to $265,000 of compensation

N/A since SEPs are only funded by employer contributions

 

Are Contributions Tax Deductible?

General Rules

IRA type

Deductibility

Employer

Investor or Employee

Traditional IRA

N/A

Yes, if you meet certain requirements (see chart below)

Roth IRA

N/A

No

SIMPLE IRA

Yes, up to the maximum contribution limit

Yes, contributions reduce the amount of income that is taxable for the year

SEP IRA

Yes, up to the maximum contribution limit

No

 

Deduction Limits for Traditional IRAs

You can make a deduction only if you meet the following requirements:

Filing status

Are you covered by an employer's retirement plan?

Modified Adjusted Gross Income (AGI)

Deductibility

Single or head of household

No

Any amount

Full

Yes

$61,000 or less

Full

More than $61,000 but less than $71,000

Partial

$71,000 or more

None

Married filing jointly or qualifying widower

No

Any amount

Full

No, but my spouse is covered (for married filing jointly only)

$184,000 or less

Full

More than $184,000 but less than $194,000

Partial

$194,000 or more

None

Yes

$98,000 or less

Full

More than $98,000 but less than $118,000

Partial

$118,000 or more

None

Married filing separately

No

Any amount

Full

No, but my spouse is covered

Less than $10,000

Partial

$10,000 or more

None

Yes

Less than $10,000

Partial

$10,000 or more

None

 

Contact your tax advisor for more information.