In 2023, the annual contribution limit for an IRA is $6,500. In 2024, the limit on annual contributions to an IRA will increase from $6,500 to $7,000.
A nonworking spouse can open and contribute to an IRA
If one spouse is working and the couple files a joint federal income tax return, the nonworking spouse can open and contribute to their own traditional or Roth IRA. A nonworking spouse can contribute as much to a spousal IRA as the wage earner in the family.
Self-employed or have a side hustle? Save with a SEP IRA
If you are self-employed, you can open a Simplified Employee Pension plan—more commonly known as a SEP IRA.
Even if you have a full-time job and earn money freelancing or running a small business on the side, you could take advantage of the potential tax benefits of a SEP IRA. The SEP IRA has a much higher contribution limit than a traditional IRA. The amount you can put in varies based on your earned income.
Traditional IRAs require you to take required minimum distributions—Roths don’t
Traditional IRAs require you to take taxable required minimum distributions (RMDs) at a certain age—Roth IRAs don’t. You’ll need to withdraw the minimum amount in a traditional IRA by the deadline or you’ll be subject to a 50% tax penalty.
Since Roth IRAs aren’t subject to RMDs, you can leave the money in your account for potential growth, or withdraw it without increasing your taxable income.
For more information on the WEA Member Benefits IRA, call us at 1-800-279-4030.