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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
traditional IRA. This is because Kristin, who has no com- money (cash, check, or money order). Property can’t be
pensation, can add Carl's compensation, reduced by the contributed.
amount of his IRA contribution ($30,000 − $6,000 =
Although property can’t be contributed, your IRA may
$24,000), to her own compensation (-0-) to figure her
invest in certain property. For example, your IRA may pur-
maximum contribution to a traditional IRA. In her case,
chase shares of stock. For other restrictions on the use of
$6,000 is her contribution limit, because $6,000 is less
funds in your IRA, see Prohibited Transactions, later in
than $24,000 (her compensation for purposes of figuring
this chapter. You may be able to transfer or roll over cer-
her contribution limit).
tain property from one retirement plan to another. See the
discussion of rollovers and other transfers later in this
Filing Status chapter under Can You Move Retirement Plan Assets.
Generally, except as discussed earlier under Kay Bailey You can make a contribution to your IRA by hav-
Hutchison Spousal IRA Limit, your filing status has no ef- TIP ing your income tax refund (or a portion of your re-
fect on the amount of allowable contributions to your tradi- fund), if any, paid directly to your traditional IRA,
tional IRA. However, if during the year either you or your Roth IRA, or SEP IRA. For details, see the instructions for
spouse was covered by a retirement plan at work, your your income tax return or Form 8888, Allocation of Re-
deduction may be reduced or eliminated, depending on fund.
your filing status and income. See How Much Can You
Deduct, later. Contributions can be made to your traditional IRA for
each year that you receive compensation. For any year in
Example. Tom and Darcy are married and both are which you don’t work, contributions can’t be made to your
53. They both work and each has a traditional IRA. Tom IRA unless you receive taxable alimony, nontaxable com-
earned $3,800 and Darcy earned $48,000 in 2022. Be- bat pay, military differential pay, or file a joint return with a
cause of the Kay Bailey Hutchison Spousal IRA limit rule, spouse who has compensation. See Who Can Open a
even though Tom earned less than $7,000, they can con- Traditional IRA, earlier. Even if contributions can’t be
tribute up to $7,000 to his IRA for 2022 if they file a joint made for the current year, the amounts contributed for
return. They can contribute up to $7,000 to Darcy's IRA. If years in which you did qualify can remain in your IRA.
they file separate returns, the amount that can be contrib- Contributions can resume for any years that you qualify.
uted to Tom's IRA is limited by his earned income, $3,800.
Contributions must be made by due date. Contribu-
tions can be made to your traditional IRA for a year at any
Less Than Maximum Contributions time during the year or by the due date for filing your re-
turn for that year, not including extensions. For most peo-
If contributions to your traditional IRA for a year were less ple, this means that contributions for 2022 must be made
than the limit, you can’t contribute more after the due date by April 18, 2023.
of your return for that year to make up the difference.
For tax years beginning after 2019, the rule that
Example. Rafael, who is 40, earns $30,000 in 2022. TIP you are not able to make contributions to your tra-
Although he can contribute up to $6,000 for 2022, he con- ditional IRA for the year in which you reach age
tributes only $3,000. After April 18, 2023, Rafael can’t 70½ and all later years has been repealed.
make up the difference between his actual contributions
for 2022 ($3,000) and his 2022 limit ($6,000). He can’t Designating year for which contribution is made. If
contribute $3,000 more than the limit for any later year. an amount is contributed to your traditional IRA between
January 1 and April 15 (April 18 for 2023), you should tell
More Than Maximum Contributions the sponsor which year (the current year or the previous
year) the contribution is for. If you don’t tell the sponsor
If contributions to your IRA for a year were more than the which year it is for, the sponsor can assume, and report to
limit, you can apply the excess contribution in one year to the IRS, that the contribution is for the current year (the
a later year if the contributions for that later year are less year the sponsor received it).
than the maximum allowed for that year. However, a pen-
alty or additional tax may apply. See Excess Contribu- Filing before a contribution is made. You can file your
tions, later, under What Acts Result in Penalties or Addi- return claiming a traditional IRA contribution before the
tional Taxes. contribution is actually made. Generally, the contribution
must be made by the due date of your return, not including
extensions.
When Can Contributions Be Contributions not required. You don’t have to contrib-
ute to your traditional IRA for every tax year, even if you
Made? can.
As soon as you open your traditional IRA, contributions
can be made to it through your chosen sponsor (trustee or
other administrator). Contributions must be in the form of
Page 10 Chapter 1 Traditional IRAs
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