IRA Contributions Guide

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Learn about the guidelines, procedures and resources available for traditional and Roth IRA contributions

Contribution limits:

The 2023 maximum contribution limit is $6,500 or 100% of taxable compensation, whichever is less. IRA owners age 50 or older (by the end of the taxable year) can make additional catch-up contributions of up to $1,000 annually.

The 2024 maximum contribution limit is $7,000 or 100% of taxable compensation, whichever is less. IRA owners age 50 or older (by the end of the taxable year) can make additional catch-up contributions of up to $1,000 annually.

The Internal Revenue Service (IRS) has a maximum IRA contribution limit, however the actual amount your client can contribute to a Roth IRA depends on their modified adjusted gross income (MAGI). See Roth IRA contributions for more information.

In some cases, a spouse with no taxable compensation can open an IRA based on their spouse’s compensation. See Traditional IRA contributions or Roth IRA contributions for more information on a spousal IRA.

Deductibility:

The ability to deduct an IRA contribution is determined by tax-filing status, MAGI and whether the IRA owner or spouse is covered by an employer-sponsored retirement plan. The current year’s deductibility chart can be found in Traditional IRA contributions.

Roth IRA contributions are not tax-deductible.

Deadline:

Contributions submitted via Automated Clearing House (ACH) can be made until the tax-filing deadline without extensions.

Contributions submitted via check must be postmarked by the tax-filing deadline without extensions.

 

Yes, eligibility for the nonrefundable Saver’s Credit is based on the IRA owner’s filing status and MAGI.

Tax-filing status

2023

2024

Single

Up to $36,500

Up to $38,250

Joint

Up to $73,000

Up to $76,500

Head of household

Up to $54,750

Up to $57,375

The credit rate available is based on the IRA owner’s MAGI and is between 10% and 50% of the contribution. In 2023 and 2024, the maximum credit allowed is $1,000 ($2,000 if married filing jointly). Refer to Retirement Savings Contributions Credit (Saver’s Credit) for more information.

One-time contributions by ACH:

To make a one-time contribution, log in to Client Accounts and click Buy. If the client’s bank account information is not already linked to the account, you will be prompted to add it.

Automatic contributions:

To establish automatic contributions, log in to Client Accounts and click Automatic transactions. The minimum automatic investment amount is $50 per fund. If the client’s bank account is not already linked to the account, you will be prompted to add it.

Contributions by check:

Checks should be payable to Capital Bank and Trust (CB&T). Be sure to include the account number and investment instructions. In addition, from January 1 until the tax-filing deadline, checks must indicate whether the contribution is for the current or prior year. Checks can be mailed to the nearest service center.

Form 5498 is mailed by May 31, after the tax-filing deadline. Investors are not required to file Form 5498 with their tax return. If your client needs documentation of their current tax year’s contributions for their tax advisor, it can be found under the Transaction History section of the advisor website. Investors can also access their transaction history on the investor website.

Review Traditional IRA tax information or Roth IRA tax information for additional tax information.

For an individual client:

To verify how much your client has contributed, visit Client Accounts, click View Transactions, then go to IRA Contributions.

For your American Funds book of business:

You can order an IRA Contributions Report. This report lists clients who haven’t contributed the maximum amount to their traditional or Roth IRA. The report will show all applicable clients listed under your representative and branch ID.

How to make an IRA contribution

Make a one-time contribution online

Log in and click Buy. If the client’s bank account is not already on file, you will be prompted to add it.

Log in to Client Accounts.

Set up automatic contributions

Log in and click Automatic transactions. If the client’s bank account is not already on file, you will be prompted to add it.

Log in to Client Accounts.

Make a one-time contribution by check

Checks should be payable to Capital Bank and Trust Company (CB&T). Include the account number, investment instructions and contribution year.

Mail a check to the nearest service center.

Explore more information about traditional and Roth IRAs

Know Your IRA Options

Share the Know Your IRA Options brochure with your clients to help them decide which type of IRA is best for them.

Get brochure

Traditional IRA contributions

Get information on eligibility, contribution limits, deductibility and tax information for traditional IRAs.

Learn more

Roth IRA contributions

Get information on eligibility, contribution limits and tax information for Roth IRAs.

Learn more

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The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.

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