Who is eligible to contribute to a traditional IRA?

Who Can Contribute to a Traditional IRA?

If you have earned income, you are likely eligible to contribute to a traditional Individual Retirement Account (IRA). This includes income from a job, self-employment, alimony, and various types of pensions and annuities. As long as you have earned income, you can contribute to an IRA, even if you are also covered by a retirement plan at work.

There are, however, a few restrictions on who can contribute to a traditional IRA. If you are covered by a retirement plan at work, your ability to deduct your IRA contribution may be limited. If you are married and your spouse is also covered by a retirement plan at work, your ability to deduct your IRA contribution may also be limited.

If you are not covered by a retirement plan at work, there are no income limits on who can contribute to a traditional IRA. However, if you are covered by a retirement plan at work, your contribution may be limited if your modified adjusted gross income (MAGI) exceeds a certain amount.

The amount you can contribute to a traditional IRA is limited to the lesser of:
• $5,500 ($6,500 if you are age 50 or older), or
• Your taxable compensation for the year.

If you are married and your spouse is not covered by a retirement plan at work, but you are, your spouse can contribute to a traditional IRA as long as you have enough earned income to cover both of your contributions. The total contribution that you and your spouse can make to your traditional IRAs cannot exceed the limit for the year.

If you are married and your spouse is covered by a retirement plan at work, your contribution may be limited if your MAGI exceeds a certain amount.

The bottom line is that anyone with earned income can contribute to a traditional IRA, but there are some income restrictions for those who are covered by a retirement plan at work.