Now that 2022 has come to a close, it’s a good time to look at your IRA contributions. The IRS provides individuals with a unique tax planning opportunity from January 1 to April 18 (the due date for individual income tax returns). During this timeframe, individuals are able to contribute to IRAs for both 2022 and 2023. This means your tax bill can potentially be reduced after the year has ended!

The first order of business is to make sure the IRA contribution for 2022 has been made. If not, do it! You have until April 18 this year to make a traditional or Roth IRA contribution for the previous year.

Once last year’s contribution has been taken care of, it’s time to think about 2023. When IRA contributions are consistently made at the beginning of the year rather than at the end, the funds have an extra 12 months in which to grow tax-deferred or tax-free. Over a period of years, there can be a substantial difference in the potential wealth accumulated. You may have one full extra year of growth when you contribute at the beginning of the tax year.

The chart below summarizes the 2022 and 2023 annual contribution limits to traditional and Roth IRAs.

Remember, your total annual contribution cannot be more than your taxable compensation for the year. However, if you file a joint return, you may be able to contribute to an IRA even if you didn’t have taxable compensation (as long as your spouse did). The amount of your combined contributions cannot be more than the taxable compensation reported on your joint income tax return.

To determine the deductibility of traditional IRA contributions or to see if you’re eligible to contribute to a Roth IRA, please follow theselinks to the IRS website:

• IRA Deduction Limits: https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits 
• Amount of Roth IRA Contributions:
  • For 2022: https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022
  • For 2023: https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023

Talk to your Stifel Financial Advisor about contributing to your IRA today!