Retirement tax questions

Yes, I'll do my best to recap these three retirement plans.

1) An IRA is an Individual Retirement Account.  The other two are accounts that are sponsored by a business.

• The maximum contribution for all your IRAs (Traditional and Roth) combined is: 
  • if you're under age 50. $6,500 (for 2023) and $7,000 (for 2024) 
  • if you're age 50 or older. $7,500 (for 2023) and $8,000 (for 2024) 
  • These contributions may be limited is you have a retirement plan at work.
  • To determine the amount you can deduct for your IRA, including if you have a retirement plan at work, you can calculate it with the following guidelines.
    • For calculation for a a Traditional IRA see: Worksheet 1-1. Figuring Your Modified AGI (IRS Pub 590)
    • For calculation of a Roth IRA see: Worksheet 2-1. Modified Adjusted Gross Income for Roth IRA Purposes (IRS PUB 590)
    • Once you have determined MAGI you can see the chart below the worksheet to determine the maximum contribution.

2) A SEP is a Simplified Employee Pension.

• A SEP is a retirement savings plan established by an employer for their employees and themselves. 
  • It can also be established by self-employed individuals. 
  • Employers can make tax-deductible contributions on behalf of eligible employees to their SEP IRAs.
  • The SEP IRA contribution limit for 2023 is 
    • 25% of eligible employee compensation, up to $66,000. 
    • The maximum compensation that can be considered for contributions in 2023 is $330,000.
• You can see more on the IRS publication Simplified Employee Pension Plan (SEP)

3)  A Simple plan to the Simple method to contribute toward employees' and their own retirement savings.

• The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed 
  • $15,500 in 2023
  • $16,000 in 2024
• SIMPLE IRA rules: Contributions and limits
  • The company will make a non-elective contribution of at least 2 percent of compensation for all eligible employees earning at least $5,000.
  • Maximum compensation is $345,000 for the 2024 tax year.
  • Make a matching contribution of 100 percent up to the first 3 percent of compensation.
• You can see more on the IRS publication SIMPLE IRA Contribution Limits

I hope this is enough to get you started.  

Please contact us again with any additional questions.