12 Things You Must Know About 2015 IRA Contributions

Friday, April 17, 2015

By Beverly DeVeny, IRA Technical Expert
Follow Me on Twitter: @BevIRAEdSlott

In a way, it is now a new year for IRA contributions. You can no longer make IRA or Roth IRA contributions for 2014 (we warned you about the deadline). Here are 12 things to know about 2015 IRA contributions.

  1. You must have compensation (generally earned income) to make an IRA or Roth IRA contribution.
     
  2. Anyone with earned income (that otherwise qualifies) can make an IRA contribution, but plan participation could limit your ability to deduct that contribution.
     
  3. You can make a contribution for a non-working or lower-wage earning spouse to their own IRA, provided they meet all other contribution rules for that IRA.
     
  4. You can make an IRA contribution even if you are maxing out your employer plan contributions, including contributions to SEP and SIMPLE IRAs; you just might not be able to deduct that contribution.
     
  5. You can make your personal IRA contribution to a SEP IRA, if the SEP IRA document allows it.
     
  6. You need a SEP IRA for your SEP contributions; they generally cannot go into a traditional IRA.
     
  7. You do not need a separate IRA for your after-tax contributions. They are tracked by you on IRS Form 8606, which treats all your IRAs as one IRA. Form 8606 gets filed with your income tax return.
     
  8. Any after-tax funds (i.e. money in a non-IRA bank account) you have cannot be contributed to a Roth IRA just because they are already after-tax amounts. See Item 1.
     
  9. IRA and Roth IRA annual contributions must be made in cash, not in kind.
     
  10. The IRA/Roth IRA contribution limit of $5,500 (for 2015) is per person, per year, not $5,500 for IRAs and another $5,500 for Roth IRAs.  Assuming you qualify for both types of IRA contributions, you can split the contribution among multiple accounts. Note: If you’re 50 or older by the end of 2015, you can contribute an additional $1,000, for a total IRA/Roth IRA contribution of $6,500.
     
  11. Parents or grandparents can make IRA or Roth IRA contributions for children who have earned income, even if the children spent every penny they earned. They can make the contribution directly to the retirement account; the contribution does not have to be made by the child.
     
  12. Contributions could still be made to SEP and SIMPLE IRAs for 2014 if the business tax return is on extension.

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