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Start Working Now on IRA and Roth IRA Contributions

To ease the stress for everyone involved, it’s better to start the process sooner rather than later.

Tax day will be here before you know it, as will the associated annual last-minute scramble to open and/or fund the various individual retirement accounts for your clients before the deadline hits.

To ease the stress for everyone involved, it’s better to start the process sooner rather than later.

Here are some less-conventional ways for you to give your clients every opportunity to sock away all the money they can toward retirement.


For the 2022 tax year, the IRA contribution limits are still the maximum of the lesser of the IRA owner’s earnings or $6,000 and $7,000 if the IRA owner was at least 50 years old during 2022.

Beginning in 2020, the age limit on IRA and Roth IRA contributions was removed, so qualifying contributors of any age are free to make the deposit.

However, the deductibility of the IRA is dependent upon whether the depositor (and their spouse, if applicable) is also covered by an at-work retirement plan, such as a 401(k).

If so, then the deductibility of the IRA deposit is dependent upon filing status and modified adjusted gross income (MAGI).

More information on the eligibility for deducting IRA deposits is available via Publication 590 at

Roth IRAs

The contribution limits are the same for Roth IRAs for the 2022 tax year as they are for IRAs. And there are income limits as well, again based on MAGI.

For single filers, maximum Roth IRA contribution amounts are reduced starting at $129,000 MAGI for 2022, and it’s phased out completely at $144,000 MAGI.

For married couples filing jointly, those amounts are $204,000 to $214,000.

Assuming your clients are eligible but hesitant to make a contribution to a Roth IRA, remind them that the contribution portion of a Roth IRA can be withdrawn at any time, for any reason, with no taxes whatsoever.

And the IRS allows those withdrawing money from a Roth IRA to designate all withdrawals as “contributions” until the total amount contributed is exhausted (which is also a good reason for you and/or your clients to document their contributions to these accounts).

That means clients can slide money from their checking, savings and rainy-day funds into Roth IRAs, with the comfort of knowing that the contributions can be taken back out at any time if needed. 

Don’t Forget the Spouse ...

Obviously if both members of a married couple have earned income, you should fund the optimal retirement account for each one of them.

But even if only one member of the couple has earnings, you can still make contributions for both partners. 

The amount that can be deposited into the spousal account is subject to the same contribution and income eligibility limits. The total of the contributions on behalf of the couple also can’t exceed the working spouse’s earnings. 

... Or the Kids

The children or grandchildren of your clients are certainly eligible to make IRA or Roth IRA contributions, as long as the kids have legitimate taxable earned income on which to base the contribution.

If the child is an adult, you will likely have to contact them directly to establish the account, arrange funding and discuss investment options.

If the kids are considered minors in their state (usually under age 18), an adult will have to serve as the custodian of the account until the child reaches the “age of majority.” 

Best of all, the kids don’t even have to use their own money to fund the retirement account. A parent, grandparent or anybody else can make the deposit for the child. But those benevolent benefactors should be aware that the deposit is a “gift” to the retirement account owner and can’t be taken back. 

Backdoor Roth IRAs

Despite legislative rumblings that this maneuver would be disallowed, as of now certain clients whose high incomes would normally preclude Roth IRA contributions can still put money in via a “backdoor” Roth IRA.

First, clients make a nondeductible contribution to their IRA, subject to the usual limits on amounts, and having earned income on which to base the deposit. Then the clients convert the IRA to a Roth IRA, and should probably do so immediately to avoid complications from any interest or gains earned while the money is held in the IRA.

But a big hurdle exists in the form of the “pro rata” rule, which says that when clients convert an IRA to a Roth IRA, the IRS will calculate the taxation proportionally among the pretax balances of all of the clients’ IRA accounts.

Therefore, it’s best to consider this tack only if the clients have no other balances in pretax IRAs.

An Extra Incentive

The Saver’s Credit is an additional financial enticement to get certain workers to set aside money in an IRA or Roth IRA (or 401(k), 403(b), 457(b), SARSEP or SIMPLE plan).

The amount of the credit can be up to 50% of the depositor’s contribution amount, depending on filing status and adjusted gross income. The maximum dollar amount of the credit is $1,000 for single filers and $2,000 for married couples filing jointly.

The depositor must also be age 18 or older, not claimed as a dependent on another person’s return and not a student (defined by the IRS as “enrolled as a full-time student at a school during any part of five months of the tax/calendar year”).

More information on the Saver’s Credit can be found in Form 8880 at  

Make 2023’s Contribution, Too

While you’re talking about IRA or Roth IRA contributions with clients for the 2022 tax year, there’s nothing to stop your clients from making the same contribution to the same account after Jan. 1 for the 2023 tax year.

The contribution limits bump up $500 for 2023.

Just make sure that clients will likely still meet the eligibility requirements in 2023 to make the corresponding contribution. 

And a year from now, don’t accidentally make a duplicate contribution for the clients. Otherwise, it will take even more work to take that money back out than it did to put it in.

Kevin McKinley is principal/owner of McKinley Money LLC, an independent registered investment advisor. He is also the author of Make Your Kid a Millionaire (Simon and Schuster).

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