Last Chance to Potentially Reduce Your 2020 Taxes. You have until May 17, 2021 to maximize your retirement account contribution for 2020 and possibly save on your 2020 tax return. Talk to an IRA Counselor today to learn more: Start a Conversation or call 855-265-4472.
The Traditional IRA allows you to invest with pre-tax contributions that can compound over time in a tax-deferred environment. Plus, owners may qualify for tax-deductions in addition to yearly contributions.
Anyone who has compensation* is eligible to make a contribution to a Traditional IRA.
The owner can begin withdrawing from the account at age 59½ (withdrawals before this are subject to penalty and taxes) and is required to take a distribution each year beginning in January after attaining the age of 72. For more information see IRA Withdrawal Rules.
Grow your retirement account over time tax-deferred, while also possibly qualifying for yearly tax-deductions. While the money is taxed when withdrawn, often owners are in a lower tax bracket at that point in their life.
Traditional IRA Eligibility
You can set up and make contributions to a Traditional IRA if you meet BOTH of these requirements:
You (or, if you file a joint return, your spouse) received taxable compensation* during the year
You were not age 70½ by the end of the year
If both you and your spouse have compensation and are under age 70½, each of you can set up an IRA. You cannot both participate in the same IRA.
*Compensation is defined as the wages, salaries, commissions, bonus, alimony and any other amount that you receive for providing personal services. For individuals who are self-employed, sole proprietors and partners in a partnership, “earned income” is another term for compensation. Passive income such as interest, dividends and most rental income are not considered compensation for the purpose of funding an IRA.
2021-2020 Contribution Limits
IRA Contribution Limits, Catch Up Provisions and Contribution Deadlines
2020 IRA Contributions & Deductions Infographic
Infographic summarizing IRS contribution limits and catch up provisions for retirement accounts
Equity Trust Company is a directed custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust Company is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional. Equity Institutional services institutional clients of Equity Trust Company. Brokerage Services Available Through ETC Brokerage Services, Member SIPC, and FINRA. *Founded in 1974 | Self-Directed IRA Custodian since 1983. The predecessor business to Equity Trust Company was established in 1974 and the IRS approved as a custodian in 1983. **Assets under custody as of 3/31/2021.
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