Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Adjustments to Income

IRA Contributions

IRA Compensation Requirement

Example

Gene and Sue are married and are both over 50 years old. Gene earned $70,000 and Sue earned $1,500. During the tax year, Gene contributed $3,500 to his traditional IRA and $2,000 to a Roth IRA, making his total contributions $5,500. To figure the maximum contribution to Sue's IRA, use a total compensation of $66,000 (i.e., $71,500 - $5,500). If Gene and Sue file jointly, they can contribute up to $6,500 to Sue's IRA even though her own compensation was just $1,500.

Although a person may have IRAs with several different financial institutions, the tax law treats all of a taxpayer's traditional IRAs as one single IRA.

Example

Bill is 29. He has a traditional IRA at City Home Savings Bank, and another traditional IRA through his stockbroker. He also opened a Roth IRA through his stockbroker. Bill can contribute to any or all of his accounts this year, but the combined contributions for the tax year cannot exceed the ceiling amount.