IRA contributions as a self-employed person

Forum|Forum|2 years ago
February 23, 2024
2 replies
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I am a new 1099 employee this year, can I contribute to my current IRA? It is an individual account that is not tied to an employer.

The account was originally a 401k about 4 years ago, but was converted to an IRA.

Thank you

PatriciaV

Level 15

Yes, as a self-employed individual with earned income, you can contribute to your current IRA. TurboTax can help you determine whether your IRA contributions are deductible and will calculate exactly how much you can deduct. See this TurboTax Tax Guide for more information: Deductions Allowed for Contributions to a Traditional IRA.

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Opus 17

Level 15

As long as you have compensation from working, you can contribute to an IRA. Compensation includes W-2 wages, and also income earned from self-employment. (Technically, your self-employment compensation is about 92% of your net profit, for reasons having to do with the difference between Social Security tax for employees and self-employment tax.)

Whether you may make a Roth IRA contribution, or a tax deductible contribution to a traditional IRA, depends on your income and your filing status.

There are several other options for self-employed individuals to contribute to a retirement account that have higher contribution limits, although they are a bit more paperwork. You may want to review these options.

https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people