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Don't Miss Out on Higher 2023 IRA Contribution Limits!

2023 contribution limits ira retirement roth ira
 

Wow, the IRA retirement contributions limits are higher in 2023, and I want to make sure that we are all maxing out our opportunities to save. Even if you're covered under an employer 401k plan, don't miss out on being able to also save into I IRA accounts! The limits in 2023, if you are under age 50, is $6,500 for the year, and over age 50 is $7,500 for the year. And don't forget that you can make IRA contributions all the way up until the tax filing deadline of April 15th for the prior tax year. So, you can spread it out really over a year plus another four months and still get in that full year's contribution.

Now keep in mind that people will say, well, when is an IRA tax deductible contribution and when is it not? So, you can always make a contribution to a traditional IRA, but the question of whether it's deductible or not depends on your income. In 2023, if you are a single filer with income up to $83,000 or a joint filer with income up to $136,000, then you can put money into that IRA and take a tax deduction for the amount of the contribution. If you're over those income limits, then well yes, you can make what we call a non-deductible IRA contribution. But don't do that. I've yet to come up with a reason of why would you want to trap money in an IRA with it's pretty restrictive withdrawal rules and not even get the benefit of a tax deduction. So, if you're over those income limits, then do something else. Don't contribute to an IRA.

You can also make a Roth IRA contribution, same dollar amount, $6,500 under age 50 and $7,500 over age 50. The income limits there are a little different. If you have income up to $153,000 as a single filer or up to $228,000 as a joint filer, then you could make a Roth IRA contribution. Keep in mind that if you are over those income limits, then you cannot make a Roth IRA contribution at all, so it’s a little different than traditional. So, up to the income limits, yes, you can contribute and if you’re over the income limits, no, you can't. And it's important to keep in mind that that $6,500 and $7,500 limit applies to both the traditional and the Roth IRA, so you can't do the same dollar amount into both. For example, you can contribute, say, $3,000 into one and $3,500 into the other, but your overall IRA contribution limit is those caps. So don't make that mistake.

My parting words to you are diligent savings really does inevitably lead to wealth. So even if you can't save that full amount, save what you can. And trust me, the wealth will follow.

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