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All IRA plans offer the ability for participants to set aside income into the plan.  This is a great way to build your tax-sheltered retirement savings and in most types of IRAs, reduce your tax liability as well. When you (or your employer in some plan formats) add money to your IRA account, this is referred to as a contribution.

All contributions must be in the form of cash.

The general contribution limits and deadlines for each type of IRA account are shown below.  A self-directed IRA LLC may be formed using any of these available IRA types.

In some cases, contributions – or the deduction associated with contributions – may be limited based on income, filing status or coverage through an employer plan such as a 401k.  We encourage you to check with your licensed tax advisor regarding contribution decisions.

Rollovers from other plans and earnings from plan investments do not apply to the plan contribution limit.

If you are married filing jointly, both you and/or your spouse may contribute to an IRA, even if one of you does not have taxable income.

With a Checkbook IRA LLC, contributions must be made into the IRA account held by the custodian.  These funds are then invested into the LLC.  Under no circumstances should you place new contributions directly into your LLC account, as this could have severe tax consequences.

Traditional IRA

Deadline to Open Account April 15 following the end of the tax year
Deadline to Contribute April 15, no extensions
Age Limit May not contribute if over 70 ½ years old
Contribution Limit $5,500 for participants under age 50

$6,500 for participants age 50 and older

Notes You must have earned income in order to contribute.  Contributions are reduced from your taxable income and the taxes are deferred until you take IRA distributions.

The ability to deduct contributions is phased out based on income, filing status and participation in an employer retirement plan.  Refer to the IRS web site for more details:

IRS IRA Deduction Limits & Income Phase-Outs

Roth IRA

Deadline to Open Account April 15 following the end of the tax year
Deadline to Contribute April 15, no extensions
Age Limit None
Contribution Limit $5,500 for participants under age 50

$6,500 for participants age 50 and older

Notes You must have earned income in order to contribute.  Contributions are taxed, but earnings and distributions are not taxed.

The ability to make contributions is phased out based on income, filing status and participation in an employer retirement plan.  Refer to the IRS web site for more details:

IRS IRA Deduction Limits & Income Phase-Outs

 

SEP IRA

Deadline to Open Account Due date of tax return, including extensions
Deadline to Contribute Due date of tax return, including extensions
Age Limit None, so long as you are a qualified employee of the employer offering the plan
Contribution Limit May not exceed the lesser of:

25% of compensation (W-2 employees)

$54,000 (2017)
$55,000 (2018)

Special calculations apply for self-employed individuals, with the maximum being approximately 20% of net business income.

Notes A SEP IRA is essentially a traditional tax-deferred IRA with the same investment, distribution and rollover rules – but with special contribution rules allowing an employer to make profit sharing contributions to the plan.

 

SIMPLE IRA

Deadline to Open Account October 1 of the tax year
Deadline to Contribute Employer contributions must be made by the due date of tax return, including extensions

Employee contributions must be made within 30 days of the end of the pay period from which the contribution is being made

Age Limit May not contribute if over 70 ½ years old
Contribution Limit  

$12,500 for participants under age 50

$15,500 for participants age 50 and older

Notes A SIMPLE IRA is an employer plan available to eligible businesses with less than 100 qualifying employees.  Contributions are made both by the employer and the employee.

 

More information on the topic of IRA accounts and contributions is available in IRS Publication 590-A.