IRS Pub 590-A – Are you planning for retirement and wondering about the rules for contributing to an Individual Retirement Arrangement (IRA)? IRS Publication 590-A is your go-to resource for understanding contributions to traditional and Roth IRAs. This comprehensive guide breaks down eligibility, limits, deductions, and more, helping you maximize tax advantages while saving for the future. Whether you’re new to IRAs or looking for updates for the 2025 tax year, this article covers everything you need to know based on the latest IRS guidelines.
What Is IRS Publication 590-A?
IRS Publication 590-A, titled “Contributions to Individual Retirement Arrangements (IRAs),” explains the rules for setting up and contributing to IRAs. It focuses on traditional IRAs and Roth IRAs, covering topics like contribution limits, eligibility requirements, deductions, rollovers, and penalties for excess contributions. This publication is essential for taxpayers aiming to build retirement savings with tax benefits. Note that distributions from IRAs are covered in a separate publication, IRS Pub 590-B.
For the most up-to-date information, always refer to the official IRS document. You can download the latest version of IRS Pub 590-A here: https://www.irs.gov/pub/irs-pdf/p590a.pdf.
Key Updates for 2025 in Pub 590-A
The 2025 edition of Pub 590-A includes several important updates:
- IRA Contribution Limits: The limit remains $7,000 for individuals under 50 and $8,000 for those 50 or older.
- Trump Accounts: New legislation introduces “Trump accounts,” a type of IRA for children born between 2025 and 2028 who meet specific criteria. Parents or guardians can elect this on Form 4547 and potentially receive a $1,000 pilot contribution.
- Modified AGI Limits: Phase-out ranges for deductions and contributions have been adjusted for inflation (detailed below).
- Looking Ahead to 2026: Contribution limits increase to $7,500 ($8,600 for age 50+).
These changes reflect ongoing adjustments to help Americans save more effectively for retirement.
Types of IRAs Covered in Pub 590-A
Pub 590-A primarily discusses two main types of IRAs:
Traditional IRAs
A traditional IRA allows contributions that may be tax-deductible, with earnings growing tax-deferred until withdrawal. Key features include:
- Eligibility: Anyone with taxable compensation (wages, salaries, etc.) can contribute, regardless of age (no upper age limit since 2020).
- Setup: Open through banks, brokers, or insurance companies. The account must be non-forfeitable and cannot include life insurance.
- Contributions: Deductible based on income and employer plan coverage. Nondeductible contributions are allowed but require tracking via Form 8606.
Roth IRAs
Roth IRAs offer tax-free qualified distributions in retirement, though contributions are not deductible. Highlights:
- Eligibility: Based on modified adjusted gross income (MAGI); no age restrictions.
- Benefits: Earnings grow tax-free, and withdrawals after age 59½ (with a 5-year holding period) are generally tax-free.
- Conversions: You can convert traditional IRA funds to a Roth IRA, but the converted amount is taxable in the year of conversion.
Both types can receive rollovers from employer plans like 401(k)s.
2025 IRA Contribution Limits
For the 2025 tax year, the IRA contribution limits are as follows:
| Age Group | Contribution Limit |
|---|---|
| Under 50 | $7,000 |
| 50 and Older | $8,000 |
These limits apply to the combined contributions to traditional and Roth IRAs. If your taxable compensation is less than the limit, your contribution is capped at your compensation amount. Spousal IRAs allow non-working spouses to contribute based on the working spouse’s income, potentially doubling the household limit to $14,000 ($16,000 if both are 50+).
Contributions can be made anytime during 2025 or by the tax filing deadline (April 15, 2026). Excess contributions incur a 6% excise tax annually until corrected.
Eligibility and Phase-Out Ranges for 2025
Traditional IRA Deduction Phase-Outs (If Covered by an Employer Plan)
Your ability to deduct contributions depends on your MAGI and filing status:
| Filing Status | Phase-Out Range (Partial Deduction) | No Deduction If MAGI ≥ |
|---|---|---|
| Single or Head of Household | $79,000 – $89,000 | $89,000 |
| Married Filing Jointly or Qualifying Widow(er) | $126,000 – $146,000 | $146,000 |
| Married Filing Separately (Lived with Spouse) | $0 – $10,000 | $10,000 |
If you’re not covered by an employer plan but your spouse is (filing jointly), the phase-out is $236,000 – $246,000.
Roth IRA Contribution Phase-Outs
Roth contributions are reduced or eliminated based on MAGI:
| Filing Status | Phase-Out Range (Reduced Contribution) | No Contribution If MAGI ≥ |
|---|---|---|
| Single, Head of Household, or Married Filing Separately (Did Not Live with Spouse) | $150,000 – $165,000 | $165,000 |
| Married Filing Jointly or Qualifying Widow(er) | $236,000 – $246,000 | $246,000 |
| Married Filing Separately (Lived with Spouse) | $0 – $10,000 | $10,000 |
Use IRS worksheets in Pub 590-A to calculate exact amounts.
Rollovers and Transfers Explained
Pub 590-A details how to move funds without taxes:
- 60-Day Rollovers: Withdraw and redeposit within 60 days; limited to one per 12 months.
- Trustee-to-Trustee Transfers: Unlimited and tax-free.
- From Employer Plans: Eligible distributions from 401(k)s or 403(b)s can roll into IRAs; 20% withholding applies unless direct rollover.
- Roth Conversions: Taxable but no 10% early withdrawal penalty.
Certain amounts, like required minimum distributions (RMDs), cannot be rolled over. RMDs start at age 73 and are detailed in Pub 590-B.
Penalties and Additional Taxes
Avoid pitfalls outlined in Pub 590-A:
- Excess Contributions: 6% tax per year on the excess amount.
- Early Withdrawals: 10% additional tax before age 59½ (exceptions apply, e.g., first-time home purchase).
- Prohibited Transactions: Can disqualify the IRA, making all assets taxable.
Correct excesses by withdrawing before your tax return due date to avoid penalties.
Saver’s Credit: Extra Incentive for Contributions
Eligible low- to moderate-income taxpayers can claim the Retirement Savings Contributions Credit (up to $1,000 per person, $2,000 for joint filers) on Form 8880. Income limits for 2025: $79,000 (joint), $59,250 (head of household), $39,500 (single). This credit directly reduces your tax bill.
How to Download IRS Pub 590-A?
To dive deeper, download the full PDF of IRS Publication 590-A directly from the official IRS website: https://www.irs.gov/pub/irs-pdf/p590a.pdf. This ensures you have the most current version for 2025 tax planning.
Final Thoughts on IRA Contributions
Understanding IRS Pub 590-A can help you make informed decisions about your retirement savings. By contributing the maximum allowed and taking advantage of deductions or tax-free growth, you can build a secure financial future. Consult a tax professional for personalized advice, as rules can vary based on your situation. Start contributing today to reap the benefits tomorrow!