An IRA is a retirement account established as a custodial account or trust for an individual, allowing investment in various vehicles, but not life insurance.

• Anyone with “taxable compensation” can contribute to an IRA—there is no longer any age limit. The age 70½ cap for traditional IRA contributions was removed starting in 2020.

• Taxable compensation generally includes wages, salaries, tips, commissions, bonuses, and net self-employment income. It can also include alimony received under pre-2019 divorce or separation agreements (since that alimony remains taxable); alimony under post-2018 agreements is not taxable and does not count.

• You can contribute for a non‑working spouse via a spousal IRA if you file a joint return and the couple has sufficient taxable compensation.

• Minors with earned income can contribute to a custodial IRA.

• For Roth IRAs, eligibility is subject to modified adjusted gross income (MAGI) limits; high income can phase out or eliminate the ability to contribute directly.

• For traditional IRAs, there are no income limits to contribute, but whether the contribution is deductible depends on income and whether you (or your spouse) are covered by a workplace retirement plan.

• Contributions are limited by annual IRS dollar caps and cannot exceed your taxable compensation for the year.

• Annual IRA contribution limit: $7,000.

• Catch-up for age 50 or older: additional $1,000 (total $8,000).

• These limits apply to contributions across all your IRAs (traditional and Roth combined) for the year.

• A “spousal IRA” isn’t a special account type; it’s a regular traditional or Roth IRA owned by a non‑earning or low‑earning spouse. The contribution is allowed based on the working spouse’s taxable compensation when you file a joint return.

• Eligibility: Must be married filing jointly, and the couple must have enough taxable compensation to cover both spouses’ IRA contributions. Each spouse must have their own IRA.

• Limits for 2025: Up to $7,000 per spouse; if age 50 or older, an extra $1,000 catch‑up (total $8,000). Contributions for both spouses combined cannot exceed the couple’s total taxable compensation for the year.

• Age: No upper age limit—contributions are allowed at any age if other requirements are met.

• Tax treatment:

  • Traditional IRA: No income limit to contribute; deductibility depends on modified AGI and whether either spouse is covered by a workplace plan.
  • Roth IRA: Subject to joint-filer MAGI phaseouts; high income can reduce or eliminate eligibility.

• Deadline: Generally the tax filing deadline for that year (typically mid-April of the following year), not including extensions.

No. Deductibility depends on whether the individual or spouse is covered by an employer plan and their income level.

A retirement account where contributions are not tax-deductible, but earnings grow tax-free and qualified withdrawals are tax-free.

• Core rule: Anyone must have taxable compensation (earned income) to contribute to a Roth IRA, and eligibility to contribute is subject to modified adjusted gross income (MAGI) limits by filing status.

• 2025 MAGI thresholds for Roth IRA contributions:

  • Single or Head of Household: Full contribution if MAGI is under $150,000; phased reduction from $150,000 to $165,000; no direct contribution if MAGI is at or above $165,000.
  • Married Filing Jointly (or qualifying widow/er): Full contribution if MAGI is under $236,000; phased reduction from $236,000 to $246,000; no direct contribution if MAGI is at or above $246,000.
  • Married Filing Separately (lived with spouse any time during the year): Phase‑out range remains $0 to $10,000.

• Age: There is no age limit for contributing to a Roth IRA as long as you have taxable compensation.

• For reference, the annual IRA contribution limit in 2025 is $7,000, or $8,000 if age 50+, combined across all traditional and Roth IRAs (subject to the Roth MAGI limits above).

• Annual Roth IRA contribution limit: $7,000; if you’re age 50 or older, you can add a $1,000 catch-up for a total of $8,000.
• This is a combined limit across all your IRAs (traditional + Roth) for the year; you can split it between accounts but the total cannot exceed the annual cap or your taxable compensation for the year.
• Your ability to contribute to a Roth IRA is also subject to MAGI-based income phase-outs; high income can reduce or eliminate the amount you can contribute directly.

Taxes must be paid on the converted amount above the cost basis, but future withdrawals may be tax-free.

Taking money out before age 59½, which is subject to income tax and a 10% penalty unless an exception applies.

• Disability of the IRA owner.

• Death of the IRA owner (paid to beneficiary).

• Unreimbursed medical expenses exceeding 7.5% of AGI for the year of the distribution.

• Health insurance premiums while unemployed (after receiving at least 12 consecutive weeks of unemployment compensation; IRA-specific).

• Qualified higher education expenses for you, your spouse, children, or grandchildren.

• First-time home purchase: up to $10,000 lifetime (can be for you, spouse, child, or grandchild).

• Substantially equal periodic payments (72(t) SEPP).

• IRS levy on the IRA.

• Qualified reservist distributions (called to active duty for >179 days or for an indefinite period).

• Rollovers/conversions: direct rollovers and Roth conversions aren’t subject to the 10% penalty (though conversions are taxable).

• Qualified birth or adoption distributions: up to $5,000 per child within one year of the event; can be repaid at any time.

• Terminal illness: penalty-free with physician certification that death is expected within 84 months (SECURE 2.0).

• Qualified disaster recovery distributions: up to $22,000 for federally declared disasters; income can be spread over 3 years and recontributed within 3 years (SECURE 2.0’s permanent framework).

• Domestic abuse distributions: up to the lesser of $10,000 (indexed for inflation) or 50% of the account; available starting 2024; can be repaid within 3 years.

• Emergency personal expense distributions: one per year up to $1,000 starting 2024; can be repaid within 3 years; if not repaid, no additional emergency distribution is allowed for 3 years.

• Current rule: For traditional IRA owners, RMDs begin at age 73. Your first RMD must be taken by April 1 of the year after the year you turn 73. Every later RMD is due by December 31 of each year.

• Important timing detail: If you delay your first RMD until April 1 of the following year, you’ll owe two RMDs in that calendar year (the delayed first one plus the current year’s by December 31).

• Transition notes:

  • If you reached age 72 in 2022 or earlier, you were subject to the prior rules and should already have started RMDs.
  • If you reach age 73 in 2024, your first RMD is due by April 1, 2025; your second is due by December 31, 2025.
  • If you reach age 73 in 2025, your first RMD is due by April 1, 2026.

• Looking ahead: The RMD beginning age is scheduled to increase to 75 starting in 2033.

• Clarifications:

  • The “still working” exception does not apply to IRAs (only to certain employer plans).
  • Roth IRAs have no lifetime RMDs for the original owner (beneficiaries may have RMD rules).

No, Roth IRAs do not require minimum distributions during the owner’s lifetime.

• A rollover is the tax-free movement of retirement funds from one eligible plan or IRA to another when done as a direct trustee-to-trustee transfer, or if an indirect distribution is redeposited within the allowed timeframe.

When the 60-day rule applies (and when it doesn’t):

• Applies: Indirect rollovers where the funds are paid to you; you must redeposit within 60 days to avoid tax/penalty. IRA-to-IRA indirect rollovers are limited to one per 12 months.
• Does not apply: Direct trustee-to-trustee rollovers/transfers (preferred), IRA-to-plan, plan-to-IRA, or plan-to-plan direct rollovers, and beneficiary moves (which must be direct).

A transfer is a direct, trustee-to-trustee movement of assets between like IRAs (e.g., traditional IRA to traditional IRA, Roth to Roth) that is not subject to the 60‑day rule, the one‑per‑12‑month rollover limit, or mandatory withholding. It’s generally nonreportable (no 1099‑R).

Key distinctions and nuances:

• Not a “rollover”: Moving money between an employer plan and an IRA—even directly—is a rollover, not an IRA transfer.
• SIMPLE/SEP: SEP IRAs transfer like traditional IRAs. SIMPLE IRAs can transfer trustee-to-trustee to another SIMPLE anytime; transfers/rollovers out to other IRA types are allowed only after the 2-year participation period.
• Beneficiaries: Inherited IRA funds can be moved only by direct trustee-to-trustee transfer between properly titled inherited IRAs (no 60‑day rollovers).

The Employee Retirement Income Security Act, a federal law setting standards for private-sector employee benefit plans.

Anyone with discretionary authority over plan management or assets, or who provides investment advice for compensation.

A document outlining a retirement plan’s investment strategy, risk tolerance, and goals.

A retirement plan providing a fixed monthly payment at retirement, with the employer bearing investment risk.

A retirement plan where benefits depend on contributions and investment gains, with the employee bearing investment risk.

A defined contribution plan allowing employees to save for retirement with pre-tax salary deferrals, often with employer matching.

A tax-deferred retirement plan for employees of certain nonprofits, public schools, and churches.

A retirement plan allowing employers (including self-employed) to make contributions to employees’ IRAs.

A retirement plan for self-employed individuals, with contribution and deduction limits.

A retirement plan not subject to ERISA or IRS requirements, often used for select employees (e.g., deferred compensation plans).

A nonqualified retirement plan for government and certain nonprofit employees, with no early withdrawal penalty for government plans.

A Coverdell Education Savings Account (ESA) is a tax-advantaged account to save for a child’s education where earnings grow tax-deferred and withdrawals are tax-free when used for qualified expenses.

Key points

• Contribution limit: Up to $2,000 per beneficiary per year (aggregate across all ESAs); contributions are in cash, not tax-deductible, and due by the tax filing deadline for that year.

• Qualified expenses: K–12 and postsecondary costs (tuition, fees, books, supplies, certain equipment; room and board for at least half-time postsecondary students). No double-dipping with other tax benefits for the same expense.

• Who can contribute: Individuals are subject to MAGI phase-outs (single $95,000–$110,000; MFJ $190,000–$220,000). Entities (e.g., corporations, trusts) aren’t subject to income limits.

• Age limits: Contributions generally allowed until the beneficiary turns 18; funds must be used by age 30 or rolled to a qualifying family member’s ESA. Special needs beneficiaries are exempt from these age limits.

• Flexibility: You may change the beneficiary to another eligible family member; ESAs can coexist with 529 plans, but they can’t be combined tax-free.

A 529 plan is a state-sponsored, tax-advantaged education savings program where earnings grow tax-deferred and withdrawals are federally tax-free if used for qualified education expenses.

Key points:

• Qualified uses: College/grad school expenses (tuition, fees, books, supplies, required equipment; room and board for at least half-time students; computers/internet), up to $10,000 per year for K–12 tuition, registered apprenticeship expenses, and up to $10,000 lifetime for student loan repayment per beneficiary (plus $10,000 for each sibling).

• 529-to-Roth IRA rollover: Up to $35,000 lifetime can be rolled from a long-standing 529 to the beneficiary’s Roth IRA, subject to a 15-year account age, annual IRA contribution limits, compensation requirements, and exclusion of contributions (and their earnings) made in the last 5 years. State tax treatment may differ.

• Contributions: No federal annual limit; high state aggregate caps (often $300k–$500k+). Contributions are completed gifts eligible for the annual gift tax exclusion and optional 5-year frontloading. No income limits for contributors.

• Ownership/control: The account owner controls investments and can change the beneficiary to a family member without tax.

• Nonqualified withdrawals: Earnings are taxed and generally face a 10% federal penalty; penalty exceptions include scholarship amounts (tax still due), death/disability, or attendance at a U.S. military academy.

• State rules: Many states offer tax deductions/credits for in-state plan contributions and may not conform to all federal uses (e.g., K–12, loan repayment, Roth rollovers). Check your state’s rules.