(616) 776-6457 | [email protected]

Blog

Everyone gets tax savings with traditional IRA contributions

Bill Morgan

June 24, 2019

If you want to limit your tax liability right now, investing money in a traditional IRA might be a smart move for you. There are, however, contribution phaseout limits based on your income that can limit how much you can contribute.

Each year, the Internal Revenue Service (IRS) uses inflation to decide if they should increase contribution limits for retirement accounts. The traditional IRA contribution limit for 2019 is $6,000. The age 50 “catch up” limit is fixed by law at $1,000 for every year.

Traditional IRA contributions are tax-deductible on both state and federal tax returns for the year you make the contribution. Withdrawals in retirement are taxed at ordinary income tax rates.

Income and age parameters with traditional IRAs

  • Income earners who are younger than 70½ can contribute to a traditional IRA. The contribution is tax-deductible depending on your income and whether you or your spouse (if you’re married) are covered by a retirement plan through your job (such as a 401(k)).
  • There are no income limits as to how much you can contribute.
  • You must begin withdrawing from your traditional IRA by April 1 the year after the year you reach age 70½.
  • You can no longer contribute to your traditional IRA account in the year you reach 70½.

Considering tax savings with traditional IRAs

  • Contributions you make to a traditional IRA may be fully or partially deductible, based on your circumstances.
  • Generally, amounts in your traditional IRA (including earnings and gains) are not taxed until distributed.
  • You have until the tax filing deadline of next year (April 15, 2020) to complete your contribution.
  • If you make withdrawals before you're 59½, you might have to pay a 10% penalty.

If you want more information about the tax savings of traditional IRA contributions, contact your Morgan & Associates CPA expert to talk it over today.

Back to List


In three easy steps, our team can help you
find your path to a sustainable, profitable business
and more individual freedom.

 

BOSS is the answer to your back office headaches. Our cloud-based solution enables you to hand complex accounting tasks over to us. We work the numbers while providing you 24/7 access to your data—and all at a fixed, affordable monthly fee.

read more

 Our Specialties

Chiropractors

We understand that the countless number of tasks associated with running a successful practice leaves you with little time to deal with your numerous accounting and tax responsibilities. That is where ...

read more

Property Management

With proactive tax strategies and industry-specific expertise, we have a proven track record of helping property management firms succeed from...

read more

Contractors

If you contract your services as a salesperson, freelance writer, graphic designer, real estate professional, or other profession contact us to learn about the comprehensive, affordable...

read more

Nonprofits

Morgan & Associates has extensive experience in nonprofit accounting, currently providing audit and tax return services to a growing number of...

read more

mobile-graphic

Latest from Our Blog


qb-proadvisor-desktop qb-proadvisor-advdesktop qb-proadvisor-online qb-proadvisor-advonline qb-proadvisor-enterprise

Learn More

membershipmembershipmembershipmembershipmembershipmembershipmembershipmembershipmembershipmembership