What Is an IRA Contribution?

A parent and child look over retirement information.

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An IRA contribution is a deposit made to an individual retirement account (IRA). Making these contributions can often help individuals save for retirement and get tax advantages.

Key Takeaways

  • IRA contributions can help individuals save for retirement.
  • You can generally make IRA contributions even if you have access to a retirement plan through your employer, but the tax implications might differ.
  • IRA contributions for a given year can generally be made in any increment up until the tax-filing deadline in the following calendar year.

How IRA Contributions Work

An IRA contribution is a deposit you make to an IRA account. Several different types of IRAs exist, such as traditional IRAs, Roth IRAs, and simplified employee pension plan IRAs (SEP-IRAs).

An IRA contribution generally starts with opening an IRA account with an eligible financial institution such as a brokerage or bank. You’ll probably have the option to manage your IRA yourself or allow the financial institution to manage your IRA. From there, you can make cash contributions to your IRA via bank transfers, check, or cash, in most cases. You can make contributions in one lump sum each year or spread them out.

For any given tax year, you can make IRA contributions at any time up until the tax-return filing due date for that year, so you have more than just the calendar year to make contributions. For example, IRA contributions for 2022 can generally be made until around the tax-filing deadline in 2023.

To make a traditional or Roth IRA contribution for a given year, you need to have taxable income for that year. You can then contribute the lesser of up to the amount of taxable income you earned or the annual contributions limits; in 2022, that’s $6,000 if you’re younger than age 50, and $7,000 if you’re 50 or older. In 2023, those numbers are $6,500 and $7,500, respectively.

The taxable-income rule can help minors contribute to an IRA, such as if a teenager earns a few thousand dollars in part-time income. A parent or other family member might open a custodial account, which the child could then access in adulthood.


Sometimes, individuals roll over assets from one account into an IRA. In this case, that might involve non-cash transfers. Rollovers don’t count toward contribution limits.

Example of IRA Contributions

For example, say you set up an IRA and decide to make automatic monthly contributions of $400 this year. In theory, the value of your contributions would grow as the investments included in your IRA increase in value.

Tax Benefits of Contributions to Traditional IRAs

In general, you can fully deduct your traditional IRA contributions if you are not covered by a retirement plan from your employer.

If you do have access to a retirement plan at work, here are the general contribution deduction rules for tax year 2022, based on modified adjusted gross income (MAGI):

Filing Status MAGI Deduction
Single or head of household $78,000 or more None
Single or head of household More than $68,000 but less than $78,000 Partial
Single or head of household $68,000 or less Full, up to your contribution limit
Married filing jointly or qualifying widow(er) $129,000 or more None
Married filing jointly or qualifying widow(er) More than $109,000 but less than $129,000 Partial
Married filing jointly or qualifying widow(er) $109,000 or less Full, up to your contribution limit

If you are married filing jointly anddo not have access to a retirement plan at work, but your spouse does, you can still take the full deduction if your modified AGI is up to $204,000 for tax year 2022. You’ll get a partial deduction if your income is more than $204,000 but less than $214,000, and you get no deduction if your MAGI is $214,000 or more.


Roth IRA contributions are not tax-deductible. Instead, the IRS allows you to take qualified distributions (withdrawals) tax-free, whereas qualified distributions from a traditional IRA are taxed. Income limits also apply to Roth IRA eligibility, even if you don’t have access to a retirement plan at work. Also, the IRA limits count for combined traditional and Roth IRA contributions, as opposed to being able to deposit $6,000 in each account in tax year 2022.

Other types of IRAs, such as SEP IRAs, count as employer-sponsored retirement plans. These have significantly higher contribution limits, and they could affect your ability to deduct contributions to a traditional IRA.

What an IRA Contribution Means for Individuals

Understanding what IRA contributions are and how to make IRA contributions can help you save for retirement. Personal factors such as your income and access to a workplace retirement plan might influence the type of IRA you contribute to, if any. For those who do contribute, though, IRAs can help you save via tax deductions (traditional IRA) or tax-free qualified withdrawals (Roth IRA).

Frequently Asked Questions (FAQs)

What is considered a contribution to an IRA

An IRA contribution includes money that you deposit into your IRA account. IRAs have contribution limits, and those limits tend to increase over time.

Do IRAs earn interest?

Typically, IRAs don't earn an interest rate. Instead, they generate returns and losses based on the investments included in them.

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