IRA

Individual Retirement Accounts (IRAs)

Employees and self-employed individuals who aren’t active participants in an employer-maintained retirement plan can deduct up to $7,000 for 2024, plus an additional catch-up of $1,000 contribution for those 50 and over, for contributions to an individual retirement account (IRA), or for the purchase of individual retirement annuities or endowment contracts. An individual who is an active participant in an employer plan (or whose spouse is) can’t make deductible IRA contributions unless his adjusted gross income is below specified levels

An individual retirement account (IRA) is a trust (or custodial account) created or organized in the U.S. with a written governing instrument. The assets of the account must be invested in a trusteed or custodial account with a bank, savings and loan association, credit union or other qualified person.

IRAs may be set up by employers for employees and by unions for members if these employer- and association-sponsored IRAs separately account for the interest of each participant (or his spouse).

Under recently enacted Tax Cuts and Jobs Act, for tax years beginning after Dec. 31, 2017, the rule that allows a contribution to one type of IRA to be recharacterized as a contribution to the other type of IRA does not apply to a conversion contribution to a Roth IRA. Thus, recharacterization cannot be used to unwind a Roth conversion.