Summary of IRA deduction rules
Quick summary of IRA rules
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The maximum annual contribution limit is $6,000 in 2021 and 2022 ($7,000 if age 50 or older).
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Contributions may be tax-deductible in the year they are made.
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Investments within the account grow tax-deferred.
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Withdrawals in retirement are taxed as ordinary income.
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The IRS requires individuals to begin taking money out of the account at age 72. (People who turned 70½ in 2019 or earlier were required to start distributions then.)
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Unqualified withdrawals before age 59½ may trigger a 10% early withdrawal penalty and income taxes.
Having earned income is a requirement for contributing to a traditional IRA, and your annual contributions to an IRA cannot exceed what you earned that year. Otherwise, the annual contribution limit is $6,000 in 2021 and 2022 ($7,000 if age 50 or older).
Here are some other traditional IRA rules related to contributions:
You can contribute to a traditional IRA and a Roth IRA in the same year. If you qualify for both types, make sure your combined contribution amount does not exceed the annual limit.
You can also contribute to a traditional IRA and a 401(k) in the same year. Contribution limits for each type of account apply.
Traditional IRA deduction rules
These income limits apply only if you (or your spouse) have a retirement plan at work.
|
Filing status |
2021 MAGI |
2022 MAGI |
Deduction |
|---|---|---|---|
|
Single or head of household (and covered by a retirement plan at work) |
$66,000 or less |
$68,000 or less |
Full deduction |
|
More than $66,000 but less than $76,000 |
More than $68,000 but less than $78,000 |
Partial deduction |
|
|
$76,000 or more |
$78,000 or more |
No deduction |
|
|
Married filing jointly (and covered by a retirement plan at work) |
$105,000 or less |
$109,000 or less |
Full deduction |
|
More than $104,000 but less than $124,000 |
More than $105,000 but less than $125,000 |
Partial deduction |
|
|
$125,000 or more |
$129,000 or more |
No deduction |
|
|
Married filing jointly (spouse covered by a retirement plan at work) |
$198,000 or less |
$204,000 or less |
Full deduction |
|
More than $198,000 but less than $208,000 |
More than $204,000 but less than $214,000 |
Partial deduction |
|
|
$208,000 or more |
$214,000 or more |
No deduction |
|
|
Married filing separately (you or spouse covered by a retirement plan at work) |
Less than $10,000 |
Less than $10,000 |
Partial deduction |
|
$10,000 or more |
$10,000 or more |
No deduction |