1.2.2.10.3.1 Traditional IRA
Traditional IRA contributions are limited to $6,000 per individual for 2022, although the government allows persons aged 50 or over to contribute an extra $1,000 as a catch-up contribution. This limit has increased to $6,500 for 2023, while the catch-up contribution remains $1,000.
If an individual is participating in another qualified retirement plan, such as a 401(k), he can open an IRA and make contributions up to the limit. He will not be able to deduct the full amount when calculating federal income taxes, however; the deduction amount will depend on the individual’s income level.
Only cash or cash equivalents can be deposited into an IRA. But once in the account, the funds can be used to buy most kinds of securities and some non-securities. Collectibles, such as works of art and stamps, and life insurance can never be purchased in an IRA.