You've successfully subscribed to Guideline | On retirement
Great! Next, complete checkout for full access to Guideline | On retirement
Welcome back! You've successfully signed in.
Success! Your account is fully activated, you now have access to all content.
It's a new year, but you can still contribute to last year's IRA
IRA Savers

It's a new year, but you can still contribute to last year's IRA

Nicolle Willson, J.D., CFP®, C(k)P®

If you didn’t know you could contribute to an IRA and a 401(k) in the same year, you’re not alone. According to a survey we conducted, 72% of respondents were either unsure or believed they couldn’t.¹ Not only can you contribute to both a 401(k) and an IRA in the same year, but you can actually contribute to last year’s IRA — also known as carryback contributions — until you file that year’s taxes.  

At Guideline, one of our main goals is to remove complexity and doubt from retirement planning and replace it with knowledge, clarity, and confidence. It can be challenging, though, to feel confident that you’re making the right decision about something as complex and nuanced as retirement planning. The benefits of a 401(k) are mostly well-known — they can help you invest in your future while taking advantage of income tax savings and your employer’s match. But what many people don’t realize is that you can actually make contributions to an IRA in the same year as a 401(k).

In this post, we’ll focus on what it means to make a carryback contribution to an IRA and the role these contributions play in your road to retirement.

Can I make a contribution that counts towards a previous year’s IRA limit?

Yes. A carryback contribution is when you contribute to your Individual Retirement Account, or IRA, for the previous year. The contribution must be made by the tax filing deadline of the year the contribution is for. For example, carryback contributions for the tax year 2022 must be made by Tax Day, which falls on Tuesday, April 18 this year.

You can make contributions that count towards a previous year’s IRA as long as you have taxable income in that tax year. You can contribute up to the limit or your taxable compensation for the year if it’s below the limit. Basically, that means you can’t contribute more to your IRA than what you’ve earned in a given tax year.

Personal and employee retirement plans

How much can I contribute to an IRA?

Every year, the IRS reevaluates these limits by considering cost-of-living adjustments. For 2022, the limit was $6,000, and for 2023, the IRS elected to raise the limit to $6,500.

If you are 50 or older by the end of the year, you’re eligible for what’s known as a catch-up contribution. This is $1,000 in both 2022 and 2023. This means that if you are 50 or older in 2022, you can contribute up to $7,000 towards your 2022 IRA. For 2023, that limit is $7,500 due to the increase noted above.

What is the benefit of making a carryback contribution?

Put simply, the benefit is to not miss out on any remaining tax advantages from your previous year’s IRA. If you haven’t yet maxed out your IRA of the prior year, a carryback contribution makes it possible for you to benefit from last year’s tax advantages before dipping into this year’s.

Who might consider carryback contributions?

Whether you’ve maxed out your 401(k) or have extra cash flow at the end of the year, carryback contributions give you more flexibility to make the most of your retirement savings strategy. There are many reasons you might want to consider making a carryback contribution.

You might want to consider making carryback contributions if you’ve put money towards retirement in the previous year but haven’t met your total allowable contribution yet. And if you simply never got around to making your IRA contributions in 2022 and don’t want to miss out on a year’s worth of tax breaks, you can still invest that money via an IRA and reflect that in your 2022 tax filing.

Are you already saving for retirement through your employer’s 401(k)? An IRA allows you additional tax deferral benefits if you’re looking to save for retirement beyond your employer-sponsored benefit.

How much can I contribute to an IRA if I have a 401(k)?

Although anyone contributing to a 401(k) may also contribute to an IRA for the same year, depending on your income, you may not be able to claim all of those contributions as a tax deduction when filing.

If you’re already contributing to a 401(k) through your employer for a given year, income levels may limit the amount you can claim as a deduction on your taxes. The income limits vary by tax filing status and are on a sliding scale from being able to take a full deduction, a partial deduction, or no deduction at all. Lastly, these income limits may change each year alongside updates to the contribution limits.

Even though you may not be able to claim the contribution as a tax deduction, there are still benefits to making contributions to an IRA if you are in a financial position to do so. Compounding interest in a tax-advantaged account like an IRA can grow to a meaningful amount by retirement.

If you’re wondering why these limits exist, remember that contributing to either a 401(k) or an IRA presents you with an opportunity to save on taxes. The federal government has to ensure that specific measures are in place to manage how much each person can take advantage of these types of accounts and the tax savings that come with them. We go into more detail in this article.

What’s the deadline to open my IRA?

If you don’t currently have an IRA but want to make carryback contributions, you’re in luck. You can open and fund your IRA for the previous year any day before tax day. The IRA does not need to be opened by the end of the year in which you’d like to make the contributions.

To speak by example, if it’s February 2023 and you don’t yet have an IRA but want to make carryback contributions for 2022, you can still open and start by funding your IRA for 2022. You’ll just need to report the contribution on your 2022 tax return instead of your 2023 one.

Is there anything else to consider?

There are several types of IRAs, with the most popular being:

  • Traditional IRAs
  • Roth IRAs

Carryback contributions are possible with either a Traditional or Roth IRA.

With a traditional IRA, contributions may be tax-deductible, as discussed in the previous section. Generally, the individual doesn’t pay taxes on the earnings until retirement, when withdrawals are taxed as income.

With a Roth IRA, all contributions are made after tax and are not tax deductible today. Any earnings and withdrawals from the plan are tax-free.² It’s important to note that while anyone with earned income may contribute to an IRA, due to the after-tax status of Roth IRAs, there are additional income limitations in place, so it’s important you brush up on these limits for your contribution strategy.

As a quick note, these income limits are also subject to change by the IRS when they reevaluate each year.


The information provided in this article is general in nature and is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances. You are advised to consult a qualified financial adviser or tax professional before relying on the information provided herein.

¹ Suzy research insights based on data collected in December 2022, from a survey of 1,013 US consumers ages 18 to 67.

² Roth distributions will be tax-free if the following conditions are met: (a) you're over age 59 1/2 AND (b) it has been 5 years since your first deposit.