5.2.4.3 Facts to Memorize About IRAs
Both traditional and Roth IRAs are subject to a number of rules about who can contribute and how much. The limits on these amounts change annually, so be sure to look up the current limits in each of these areas prior to taking the exam.
• Eligibility to contribute to a traditional IRA—Individuals can contribute from their earned income (not investment income) to a traditional IRA up to the annual contribution limits. (As of 2020, IRA contributions may be made at any age. Previously, there was an age limit of 70 ½ years). If neither a person’s employer nor their spouse’s employer offers retirement plans, then their contribution is always deductible. If their or their spouse’s employer does offer a retirement plan, then deductibility of their traditional IRA contribution may be limited by making too high an income for the year.
• Eligibility to contribute to a Roth IRA—Individuals can