Individual Retirement Accounts (IRAs) IRAs typically have more investment options than employer-sponsored plans. However, IRAs have lower federal contribution limits: $6,500 combined annual limit, or $7,500 for those age 50 and older in 2023. If you file a joint return, you and your spouse can each make an IRA contribution even if one spouse has no earned income, as long as joint earned income exceeds the combined annual contribution. You have until the April tax filing deadline to make IRA contributions for the previous tax year. There are two basic types of IRAs: traditional and Roth. If you want a current-year tax deduction and expect to be in a lower tax bracket in retirement, a traditional IRA might be an appropriate choice. If you prefer a tax-free source of retirement income, you might contribute after-tax dollars to a Roth IRA. Roth IRA Conversions Assets in a traditional IRA (or in a former employer’s retirement plan) can be converted to a Roth IRA to benefit from tax-free distributions in retirement. The amount converted is taxable as ordinary income in the conversion year, which might move you into a higher tax bracket. Although the tax liability could be significant, under current law (and if all conditions are met), the Roth account will incur no further income tax liability for the rest of your lifetime or the lifetimes of your account beneficiaries, regardless of how much growth the account experiences.