General IRA Information

• An IRA allows you to save and invest money for retirement while deferring the taxes normally owed on earnings. Contributions can be made at any time provided that they do not exceed the annual limits. Funds withdrawn before the account holder turns age 59 1/2 may be subject to a 10 percent tax penalty and be subject to ordinary income taxes.
  
  

Income Requirements

• IRA contributions can only be made from earned income. A person must have income greater than or equal to the total IRA contributions made in a given year. For example, a person with $3,000 in income may only contribute up to $3,000 to an IRA. There is an exception for spouses called a spousal IRA. People who are married filing jointly may contribute to a spousal IRA even if one spouse has no income as long as the couple's total income is equal to or greater than the total contributions made by both spouses to IRAs for the year.
  
  

Income Limits

• There is no limit on how much income a person can earn for contributing to a traditional IRA. However, only taxpayers below certain income limits may deduct such contributions from their income taxes. Roth IRAs have an upper income limit. You can contribute to a Roth IRA only when your income is less than $110,000 if you are married filing joint or less than $66,000 if you file as single.
  
  

IRA Contribution Timing

• You may contribute to an IRA at any time during the year provided that the total IRA contributions do not exceed the annual maximum of $5,000. IRA owners over age 50 may contribute an additional $1,000 catch-up contribution at any time during the year for a total contribution of $6,000. The Internal Revenue Service permits taxpayers to make an IRA contribution for the previous tax year until April 15 of the current year.
  
  

IRA Age Restrictions

• There is no minimum age requirement for opening an IRA as long as the account owner has sufficient income to make an allowable contribution. There is also no upper age limit on making IRA contributions. However, taxpayers over age 70 1/2 must take required minimum distributions each year from a traditional IRA account. Roth IRAs do not require minimum distributions to be taken.