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As the April 15 tax deadline approaches, some investors will soon be making last-minute contributions to individual retirement accounts.
According to Fidelity Investments, Tax Day is the deadline for 2025 IRA contributions, and deposits typically spike, and this season is no different.
Average IRA contributions in the two weeks ending March 20 increased 18% compared to the previous five weeks, according to Fidelity data. Almost three-quarters of these deposits went into after-tax Roth IRAs rather than traditional pre-tax IRAs.
Whether you’re considering Roth or traditional IRA contributions, Rita Assaf, vice president of retirement recruiting at Fidelity Investments, told CNBC it’s important to “know your numbers.”
The IRA contribution limit for 2025 is $7,000, with an additional $1,000 for investors age 50 and older, assuming the investor has at least this amount of work income.
Although there are no upfront tax benefits for Roth IRA contributions, the fund grows tax-free and investors typically do not have to pay taxes on withdrawals in retirement.
By comparison, certain traditional IRA contributions qualify for a deduction, but the funds grow tax-deferred and future withdrawals are subject to ordinary income taxes.
However, not everyone qualifies for deductions on Roth IRA contributions or traditional IRA deposits. Here are some important points to know before making a last-minute investment.
Who is eligible for Roth IRA contributions in 2025?
Fidelity Investments’ Assaf says eligibility for Roth IRA contributions depends on earnings, and many investors overestimate the amount they can deposit.
“Part of the difficulty” is that eligibility is based on “modified adjusted gross income” (MAGI), which can confuse the calculations, she said.
Additionally, the IRS says there are different versions of the MAGI calculation, which vary by tax deduction.
For Roth IRA contributions, the number starts with your adjusted gross income (line 11a of your 2025 tax return) and adds certain tax breaks, such as deductions for IRA contributions and student loan interest. This calculation also subtracts income from Roth conversions and retirement plan rollovers.
In 2025, you can contribute up to $7,000 to a Roth IRA ($8,000 if you’re 50 or older) if your MAGI is less than $150,000 for single filers or $236,000 for married couples filing jointly.
Contribution limits are phased out or reduced as MAGI increases, and are completely eliminated at $165,000 for single filers and $246,000 for married couples filing jointly.
Who is eligible for the traditional IRA deduction in 2025?
Anyone with earned income can make traditional pre-tax IRA contributions, but the amount deducted depends on MAGI and participation in a workplace retirement plan.
Participation in a workplace plan may include your or your spouse’s 401(k) contributions, company matching, profit sharing or other employer deposits. Corporate plans phase out traditional IRA deductions depending on filing status and MAGI.
However, there’s more to consider than just the possibility of deducting your IRA contributions this year. Experts say you should consider your investment goals, current and future income tax brackets, and potential tax spread among accounts.
“Don’t rush to donate just because there’s a deadline,” says Joon Eum, a certified financial planner and managing owner of Secure Tax and Accounting, a financial firm in Hayward, California. “See if it actually fits your situation.”
