We know tax season can be complicated. This article contains information specific to your IRA, so you know what to expect when it’s time to file your taxes.

The IRS determines contribution limits each year which determine how much money you can contribute to your IRA that year. Limits vary by type of IRA and include deposits made into IRAs at different brokerages. Contributions are deposits that you make into your IRA and don’t include rollovers or dividends.

Traditional and Roth IRA

The IRS determines how much money you can contribute to your IRA each year. Contributions are deposits that you make into your IRA and don’t include rollovers or dividends.

The contribution limits that the IRS sets is your total limit across all your IRAs. Total contributions between all Traditional and Roth IRAs can’t exceed these contribution limits.

For example, if you have a Traditional IRA and a Roth IRA, you cannot exceed the contribution limits (depending on age) between both IRAs.

The and 2023 and 2024 contribution limits for Traditional and Roth IRAs are:

Spousal IRAs

If you don’t have earned income but you file your taxes jointly with your spouse, you may be eligible to contribute to your IRA depending on your spouse’s earned income. Please refer to this article for additional IRS guidance.

M1 does not offer “Spousal IRA” as an account type. An IRA account must be created under the account owner’s name and SSN. Spouses utilizing the IRS Spousal IRA allowance will each need to create their own M1 profiles and open their own Traditional or Roth IRA to make contributions.

SEP IRAs

SEP IRA contributions are different than other IRA contributions as they are not eligible for contribution year changes. SEP contributions are designated as a contribution for the calendar year in which they are made.

For example, M1 will report SEP IRA contributions made in 2023 as 2023 contributions.

The contribution limits for SEP IRAs are:

You have until the tax filing deadline to make IRA contributions for the given tax year. This provides you with additional time to make the maximum amount of contributions to a given tax year.

For example, you have until the 2023 tax filing deadline to make 2023 IRA contributions.

From January 1 to the tax deadline (typically April 15), M1 offers the option to choose “Prior Year” or “Current Year” when making a contribution. This allows you to max out your contributions for the previous tax year.

If you want to make a contribution for 2023 between January 1, 2024 and the tax filing deadline, you can select ‘Prior Year’ when making your deposit.

Qualified earned income for a Roth IRA includes:

Examples of income that don’t count as qualified earned income include:

If you have no earned income and contribution to your IRA, you may be subject to a 6% IRS penalty due to making an excess contribution. The penalty tax will be applied each year that the excess contribution remains in your IRA.

Please note that qualified earned income types are subject to change based on IRS guidance. If you have questions about your income qualification, we recommend contacting a tax professional.

Depending on actions taken within your IRA, you may receive Form 1099-R or Form 5498. A 1099-R is used to report withdrawals taken out of an IRA and a 5498 is used to report a contribution into an IRA.

We expect 1099-Rs to be available for viewing in the beginning of February, and 5498s to be available for viewing in early June.

If you’re not sure which tax forms to expect after an IRA conversion, recharacterization, or contribution year change, you can find additional information in the articles below.

Click here to locate your tax documents.

M1 and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

Brokerage accounts on the M1 platform are either fully disclosed to APEX Clearing or cleared through M1 Finance LLC. Please look at your account statement to determine how your account is cleared.

All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Using margin can add to these risks. Users utilizing APEX cleared margin accounts should review the APEX margin account risk disclosure before borrowing. Users utilizing M1 cleared margin accounts should review the M1 margin account risk disclosure before borrowing. M1 Margin Loans are available on margin accounts with at least $2,000 invested per account. Not available for Retirement or Custodial accounts. Margin rates may vary.

Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.

20231227-3294715-10457248