How Much Can Be Contributed? As soon as you set up your traditional IRA, contributions can bemade to it through your chosen sponsor (trustee or otheradministrator). Contributions must be in the form of money(cash, check or money order). Property cannot be contributed.However, you may be able to transfer or roll over certain propertyfrom one retirement plan to another. See the discussion of rolloversand other transfers later in this chapter. Contributions can be made to your traditional IRA for each yearthat you have received compensation and have not reached age 70 1/2 during the year. For any year in which you do not work,contributions cannot be made to your IRA unless you receive alimony orfile a joint return with a spouse who has compensation. See WhoCan Set Up a Traditional IRA?, earlier. Even if contributionscan not be made for the current year, the amounts contributed foryears in which you did qualify can remain in your IRA. Contributionscan resume for any years that you qualify. Limits and Other Rules There are limits and other rules that affect the amount that can becontributed. These limits and rules are explained below. General limit.The most that can be contributed for any year to your traditionalIRA is the smaller of the following amounts: Your compensation (defined earlier ) that you must includein income for the year, or $2,000. Note.This limit is reduced by any contributions to a section 501(c)(18)plan (generally, a pension plan created before June 25, 1959, that isfunded entirely by employee contributions). hôtels BrnoThis is the most that can be contributed regardless of whether thecontributions are to one or more traditional IRAs or whether all orpart of the contributions are nondeductible (see NondeductibleContributions, later). Caution: Contributions on your behalf to a traditional IRA reduce your limitfor contributions to a Roth IRA (see chapter 2). Examples.George, who is single, earns $24,000 in 1999. His IRA contributionsfor 1999 are limited to $2,000. Danny, a college student working part time, earns $1,500 in 1999.His IRA contributions for 1999 are limited to $1,500, the amount ofhis compensation. Spousal IRA limit.If you file a joint return and your taxable compensation is lessthan that of your spouse, the most that can be contributed for theyear to your IRA is the smaller of the following two amounts: $2,000, or The total compensation includable in the gross income ofboth you and your spouse for the year, reduced by the following twoamounts. Your spouse's IRA contribution for the year. Any contributions for the year to a Roth IRA on behalf ofyour spouse. This means that the total combined contributions that can bemade for the year to your IRA and your spouse's IRA can be as much as$4,000. Note.This traditional IRA limit is reduced by any contributions to asection 501(c)(18) plan (generally, a pension plan created before June25, 1959, that is funded entirely by employee contributions). Caution: Contributions to traditional IRAs reduce the limit forcontributions to Roth IRAs (see chapter 2). Example.Christine, a full-time student with no taxable compensation,marries Jeremy during the year. For the year, Jeremy has taxablecompensation of $30,000. He plans to contribute (and deduct) $2,000 toa traditional IRA. If he and Christine file a joint return, each cancontribute $2,000 for the year to a traditional IRA. This is becauseChristine, who has no compensation, can add Jeremy's compensation,reduced by the amount of his IRA contribution, ($30,000 - $2,000= $28,000) to her own compensation (-0-) to figure hermaximum contribution to a traditional IRA. In her case, $2,000 is hercontribution limit, because $2,000 is less than $28,000 (hercompensation for purposes of figuring her contribution limit). Age 70 1/2 rule.Contributions cannot be made to your traditional IRA for the yearyou reach age 70 1/2 or any later year. Community property laws.Except as just discussed under Spousal IRA limit, eachspouse figures his or her limit separately, using his or her owncompensation. This is the rule even in states with community propertylaws. Filing status.ERROR MSGGenerally, except as discussed earlier under Spousal IRAlimit, your filing status has no effect on the amount ofallowable contributions to your traditional IRA. However, if duringthe year either you or your spouse was covered by a retirement plan atwork, your deduction may be reduced or eliminated, depending on yourfiling status and income. See How Much Can I Deduct?,later. Example.Tom and Rosa are married and both are under age 70 1/2.They both work and each has a traditional IRA. Tom earned $1,800 andRosa earned $48,000 in 1999. Even though Tom earned less than $2,000,they can contribute up to $2,000 to his IRA for the year, under thespousal IRA limit rule, if they file a joint return. They cancontribute up to $2,000 to Rosa's IRA. If they file separate returns,the amount that can be contributed to Tom's IRA is limited to $1,800. Contributions not required.You do not have to contribute to your traditional IRA for every taxyear, even if you can. accommodation in LilleLess than maximum contributions.If contributions to your traditional IRA for a year were less thanthe limit, you cannot contribute more in a later year to make up thedifference. Example.Justin earns $30,000 in 1999. Although he can contribute up to$2,000 for 1999, he contributes only $1,000. Justin cannot make up the$1,000 ($2,000 - $1,000) difference between his actualcontributions for 1999 and his 1999 limit by contributing $1,000 morethan the limit in 2000 or any later year. More than maximum contributions.If contributions to your IRA for a year were more than the limit,you can apply the excess contribution in one year to a later year ifthe contributions for that later year are less than the maximumallowed for that year. See Excess Contributions, later. More than one IRA.If you have more than one IRA, the limit applies to the totalcontributions made on your behalf to all your traditional IRAs for theyear. Caution: The limit for contributions to Roth IRAs (see chapter 2)is reducedby contributions made on your behalf to your traditional IRAs. Both spouses have compensation.If both you and your spouse have compensation and are under age 70 1/2, each of you can set up an IRA. You cannot bothparticipate in the same IRA. Inherited IRAs.If you inherit a traditional IRA from your spouse, you can chooseto treat it as your own by making contributions to it. SeeInherited IRAs, earlier. If, however, you inherit a traditional IRA and you are not thedecedent's spouse, you cannot contribute to that IRA, because youcannot treat it as your own. Annuity or endowment contracts.If you invest in an annuity or endowment contract under anindividual retirement annuity, no more than $2,000 can be contributedtoward its cost for the tax year, including the cost of life insurancecoverage. If more than $2,000 is contributed, the annuity or endowmentcontract is disqualified. Brokers' commissions.Brokers' commissions paid in connection with your traditional IRAare subject to the contribution limit and are notdeductible as a miscellaneous deduction on Schedule A (Form1040). Trustees' fees.Trustees' administrative fees are not subject to thecontribution limit. A trustee's administrative fees that are billedseparately and paid in connection with your traditional IRA aredeductible. They are deductible (if they are ordinary andnecessary) as a miscellaneous deduction on Schedule A (Form 1040). Thededuction is subject to the 2%-of-adjusted-gross- income limit. When Can Contributions Be Made? Contributions can be made to your traditional IRA for a year at anytime during the year or by the due date for filing your return forthat year, not including extensions. For most people, thismeans that contributions for 1999 must be made by April 17, 2000. Designating year for which contribution is made.Hoteles de lujo baratos BalatonfuredIf an amount is contributed to your traditional IRA between January1 and April 17, you should tell the sponsor which year (the currentyear or the previous year) the contribution is for. If you do not tellthe sponsor which year it is for, the sponsor can assume, forreporting to the IRS, that the contribution is for the current year(the year the sponsor received it). Filing before a contribution is made.You can file your return claiming a traditional IRA contributionbefore the contribution is actually made. However, the contributionmust be made by the due date of your return, not includingextensions. Can I Take an IRA Deduction?