We encourage you to consult your tax advisor or financial professional to discuss your financial goals, eligibility and individual tax situation. For additional information, you can also refer to IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), at irs.gov.
Anyone under age 70½ who earns income through employment.
For 2019, the IRA annual contribution limit is $6,000 or 100% of your compensation, whichever is less.
For 2019, individuals age 50 and older may contribute up to an additional $1,000 to their IRAs.
Contributions for the current tax year must be made by April 15 of the following year.
Depending on your tax-filing status, modified adjusted gross income (MAGI) limits and retirement plan participation, you may be eligible to deduct your full contribution, part of it or none of it. Your MAGI is calculated by subtracting certain expenses and allowable adjustments from your gross income. To determine your MAGI, contact your tax advisor.
Use the table below to determine who can take a deduction.
Single (IRA owner is covered by a retirement plan at work)
$64,000 or less
$74,000 or more
Joint (IRA owner is covered by a plan at work)
$103,000 or less
$123,000 or more
Joint (IRA owner’s spouse, not IRA owner, is covered by a plan at work)
$193,000 or less
$203,000 or more
IRA investors who are not covered by a retirement plan at work and who are single or who have a spouse not covered by a plan at work can contribute up to $6,000 in 2019 (compensation must equal or exceed the contribution) and can deduct the full contribution amount. There is no maximum MAGI limitation.
Eligible taxpayers can claim a nonrefundable tax credit for contributions to their IRAs. The maximum credit allowed is 50% of total annual contributions up to $2,000, so long as household income doesn't exceed certain limits.
For 2019, joint filers with a MAGI of $64,000 or less and single filers with a MAGI of $32,000 or less qualify.
Unemployed spouses (or spouses not covered by a retirement plan at work) can make tax-deductible contributions to an IRA, even if the other spouse is covered by a retirement plan at work.
Up to $6,000 in 2019 (spouses age 50 and older may contribute an additional $1,000) may be contributed as long as the couple files a joint tax return with compensation equal to or exceeding the IRA contributions for the year.
If the employed spouse is covered by a retirement plan, the unemployed spouse can make tax-deductible contributions to an IRA if the couple’s combined MAGI is less than $193,000 for 2019. The deduction is phased out if the couple’s combined MAGI is between $193,000 and $203,000.
You may withdraw money penalty-free before age 59½ for any of the following reasons:
These exceptions are often referred to as 72(t) provisions because they fall under Internal Revenue Code Section 72(t).
All withdrawals are taxed as ordinary income.
American Funds traditional IRA fees include:
Note: The setup charge and annual fee discussed above also cover SEP accounts with the same Social Security number. A separate $10 setup charge and annual custodian fee apply to the following accounts:
Converting to a Roth IRA is a taxable event, and the rules and tax calculations can be complicated. State income-tax rules for conversions may differ from federal rules. We encourage you to discuss conversion options with your tax advisor or financial professional.
Rollovers from retirement plans must be invested in Class A shares (generally with a front-end sales charge) or in Class C or F shares, according to the purchase policies described in each mutual fund’s prospectus.
Each investor's situation is unique, so we encourage you to consult your tax advisor or financial professional to discuss your situation. For additional information about traditional and Roth IRAs, you can also refer to IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), at irs.gov.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.