You can make IRA contributions until the tax deadline for each year. For example, you can make 2025 IRA contributions until the 2025 tax return deadline on April 15, 2026.
SIMPLE IRAs and SEP-IRAs have somewhat higher contribution limits.
For 2025, employees are allowed to contribute up to $16,500. This limit rises to $17,000 in 2026. Workers 50 and older can make an additional $3,500 in catch-up contributions in 2025 and $4,000 in 2026.
Employers can choose to match employee contributions up to 3% of salary or contribute a flat rate of 2% of salary for all employees, regardless of the employees' contributions. Self-employed individuals with SIMPLE IRAs are considered both employee and employer for contribution purposes.
On the other hand, SEP-IRA contributions are considered to come entirely from the employer, who can contribute up to 25% of the employee's compensation, or $70,000 in 2025 and $72,000 in 2026, whichever is less.
How IRA eligibility works
Everyone is eligible to contribute to a traditional IRA, but in order to deduct your contributions, which is the main benefit of choosing a traditional IRA, you need to meet certain requirements related to your income and your eligibility to participate in a retirement plan through your employer. If you don't have a retirement plan at work, you can contribute to an IRA. But if you or your spouse is eligible to participate in a retirement plan through an employer, you can take advantage of the traditional IRA deduction only if your income is under a certain threshold, which the IRS determines annually.
Unlike with a traditional IRA, not everyone can contribute to a Roth IRA. Roth IRA eligibility is income-restricted, regardless of eligibility for an employer's retirement plan. The IRS also determines the Roth IRA income limitations annually.
SEP-IRAs and SIMPLE IRAs are not income-restricted, as they are designed to be retirement plans for small employers and the self-employed. So if you meet the criteria for opening and contributing to one of these account types, it doesn't matter how much money you earn.
How IRA investments work
Once you contribute to an IRA, you literally have thousands of investment options. You can choose any stocks, bonds, or funds you'd like, or you can keep some of the money in cash, CDs, or money market accounts.
If you prefer to keep your retirement investing on autopilot, you can choose to invest in index funds or actively managed mutual funds or ETFs. On the other hand, if you have the time and desire to research individual stocks, you can certainly use an IRA to invest in them.
