The tax filing deadline was extended for 2019 individual income tax returns to July 15, 2020. In addition, many tax related deadlines that are tied to the filing due date were also extended until July 15, 2020. One major deadline that was extended is the IRA contribution deadline for 2019 amounts. Therefore, you still have a few more days to make a last minute Traditional IRA contribution, or Roth IRA contribution.
For 2019, the total IRA contribution limit either to a Traditional, or Roth, or a combination of the two types of accounts for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is $19,000.
The limit on annual contributions to an IRA, is $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment is $1,000.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2019. The income limits are based on the Modified Adjusted Gross Income (MAGI) of the taxpayers.
Contributions to traditional IRAs are deductible up to the lesser of the contribution limit or 100% of the taxpayer’s compensation. Compensation is generally what a person earns from working.
However, if a taxpayer or their spouse was covered by a workplace retirement plan, the deduction for contributions to a traditional IRA for tax year 2019 is reduced, or phased out, until it is eliminated, based on the taxpayer’s filing status and MAGI. If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply. Here are the phase-out ranges for 2019:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000 to $74,000.
- For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
Even though contributions to Roth IRAs are not tax deductible, for tax year 2019 the maximum amount a taxpayer can contribute is reduced based on their MAGI. The income phase-out range for taxpayers making contributions to a Roth IRA is $122,000 to $137,000 for singles and heads of household. For married couples filing jointly, the income phase-out range is $193,000 to $203,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $64,000 for married couples filing jointly; $48,000 for heads of household; and $32,000 for singles and married individuals filing separately.
If you need last minute assistance to determine, if you can, or should make a contribution to a Traditional, or Roth IRA, call us 707-602-7402, send an email to firstname.lastname@example.org, or fill out the contact form at Lydfordfinancial.com