Case Study 3: IRA Compensation Requirement
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. Can Bill contribute to all his accounts?
Bill can contribute to any or all of his accounts this year, but the combined contributions for the tax year cannot exceed the lesser of the general IRA limit or his compensation for the tax year. 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.