Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs)

Publication 590-A, also known as 590a, is an official IRS resource that explains the rules and guidelines for contributing to Individual Retirement Arrangements (IRAs). It covers eligibility, contribution limits, types of IRAs, and various tax considerations.

What is Publication 590-A?

Publication 590-A, or 590a, is an official document published by the Internal Revenue Service (IRS) that provides detailed information about contributing to Individual Retirement Arrangements (IRAs).

It is important to note that Publication 590-A does not cover withdrawals or distributions from IRAs. For information on withdrawals, refer to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

Who should use Publication 590-A?

This publication helps individuals understand the different types of IRAs available, eligibility requirements for each type, and the annual contribution limits.

It is a valuable resource for:

1. Individuals considering opening an IRA for the first time.
2. Existing IRA holders who want to learn about maximizing their contributions or changing their contribution strategy.
3. Tax professionals and financial advisors who help clients with IRA contributions.

Key Points in Publication 590-A:

Types of IRAs:

1. Traditional IRAs: Contributions may be tax-deductible depending on your income and coverage under an employer-sponsored retirement plan.
2. Roth IRAs: Contributions are not tax-deductible, but qualified distributions are generally tax-free and penalty-free.
3. Other types: SEP IRAs, SIMPLE IRAs, spousal IRAs (consult Publication 590-A for details).

Eligibility:

Generally, anyone with earned income can contribute to an IRA. Publication 590-A outlines specific rules regarding income limitations and coverage under employer plans for Traditional IRA deductions.

Contribution Limits:

1. The annual contribution limit for IRAs is $6,500 for individuals under 50 and $7,500 for individuals aged 50 or older (as of 2023).
2. Publication 590-A explains how these limits may be prorated if you contribute to both a Traditional and Roth IRA in the same year.

Contribution Deadlines:

Contributions to an IRA for a specific tax year can be made until the tax filing deadline (including extensions) for that year.

Tax Considerations:

1. Publication 590-A details the tax-deductible potential of Traditional IRA contributions and the tax-free nature of qualified distributions from Roth IRAs.
2. It also explains potential penalties for early withdrawals (generally before age 59½) and excess contributions.