IRS IRA Deposit Rules

By Kent Ninomiya

  • Overview

    The Internal Revenue Service has very strict rules regarding Individual Retirement Account deposits. The IRS IRA deposit rules vary depending on an investor's income, age and the tax year in which the deposit is made. It is important to be aware of the IRS IRA deposit rules and follow them. The IRS enforces harsh penalties for breaking its regulations.
  • Deposit Eligibility

    The IRS IRA deposit rules are different for different kinds of IRA accounts. Any taxpayer with taxable income can deposit money into a Traditional IRA as long as the deposit amount does not exceed a set amount. Only certain taxpayers are allowed to open and deposit money into a Roth IRA. In the 2008 tax year, deposits to a Roth IRA were only allowed for single people with modified adjusted gross incomes lower than $116,000 and married people with MAGI lower than $169,000. Limited deposits are allowed for single people with an MAGI between $101,000 and $116,000 and married people with MAGI between $159,000 and $169,000. The IRS changes these amounts from time to time, so check with them before making any deposit.
  • Deposit Limits

    The IRS IRA deposit rules cap the amount you can put in an IRA in a given tax year. The limits are the same for both Traditional IRAs and Roth IRAs. In the 2008 tax year, deposits were limited to $5,000. Between 2005 and 2007, it was $4,000. Between 2002 and 2004, it was $3,000. In 2001 and before, the deposit limit was $2,000. Always check with the IRS before making an IRA deposit in case there is a deposit limit change.


  • Catch Up Contributions

    The IRS IRA rules allow for "catch up contributions" for older taxpayers depositing money in their IRAs. You must be 50 years old or older to qualify. In the 2008 tax year, the catch up contribution limit was $6,000. In 2006 and 2007, it was $5,000. In 2005 it was $4,500. Between 2002 and 2004, it was $3,500. In 2001 and before, there were no catch up contributions. Older investors were subject to the same deposit limits as younger investors. Catch up contributions are also expected to change, so check with the IRS for the latest figures.
  • Tax Deduction

    The IRS IRA rules allow certain taxpayers to deduct their IRA deposits on their tax returns. This deduction is only available for Traditional IRA deposits. Roth IRA deposits are not eligible. In the 2008 tax year, tax deductions for the full deposit amount were available to single taxpayers with modified adjusted gross incomes below $53,000 and married people with MAGI below $85,000. Partial deductions are allowed for single people with MAGI between $53,000 and $63,000 and married people with MAGI between $85,000 and $105,000. Anyone making more than that can still make a Traditional IRA deposit, but they won't get a tax deduction.
  • End of Deposits

    The IRS IRA rules limit who can make deposits to certain types of IRAs at certain ages. Any investor who is 70 1/2 years old or older is banned from making deposits to a Traditional IRA. This applies for the entire tax year in which they turn 70 1/2 years old. Roth IRAs allow deposits at any age.
  • Deposit Deadline

    Deposits can be made to an IRA for a given tax year up until the tax filing deadline for that tax year. That means taxpayers have until April 15 of the following calendar year to make an IRA deposit for the previous tax year. Deposits can be made as early as January 1 of the tax year.
  • © High Speed Ventures 2011