Contributing to an IRA can have certain tax benefits before and in retirement. How contributions are reported and applied to your taxes depends on your individual circumstances. Some of the factors to consider are the type of contributions you are making, other retirement plans available to you by your employer, and your income.

It is important to discuss your situation with your Tax professional before contributing to an IRA to understand what makes the most sense for you.

Roth IRA

Contributions to a Roth IRA are never tax-deductible as contributions are made with after-tax dollars. While contributions are not deductible, investments grow tax-free, and eligible withdrawals of earnings in retirement are not taxed. The ability to contribute to a Roth IRA is dependent on your modified adjusted gross income. You can learn more about Roth IRA eligibility here.

Traditional IRA

Contributions to a Traditional IRA may be tax deductible depending on your circumstances, your modified adjusted gross income, and whether or not you are covered by your employer’s retirement plan.

When you and/or your spouse are covered by an employer-sponsored retirement plan, contributions to your Traditional IRA may be partially tax-deductible or may not qualify for any deductions depending on your income. You can see how this may affect you by reviewing the IRS website here or discussing with your Tax professional.

When you and/or your spouse are not covered by an employer-sponsored retirement plan, your Traditional IRA contributions are fully tax-deductible, subject to the limitations for contributions set by the IRS. You can find more information here, or discuss further with your Tax professional.

While the limits on deductible amounts won’t change your annual contribution limit, it's important to note that you can't claim a tax deduction that exceeds the total you contributed to your IRA during that year.

You can learn about current contribution limits here.

For further questions please contact the Member Support team via in-app chat or email at support@public.com.

This information is for educational purposes only and is not tax or investment advice. Consult your tax advisor for individual considerations. All investing involves risk. Visit the IRS website for more information.