What is a Contribution?

Individual retirement arrangements were introduced in 1974 with the enactment of the Employee Retirement Income Security Act (ERISA).

Originally, taxpayers could contribute up to $1,500 a year and reduce their taxable income by the amount of their . Initially, restricted IRAs to workers who were not covered by a qualified employment-based retirement plan.

Currently, an can only be funded with cash or cash equivalents. Attempting to transfer any other type of asset into the is a prohibited transaction and disqualifies the fund from its beneficial tax treatment. , transfers, and conversions between IRAs and other retirement arrangements can include any asset. The maximum for an IRA contribution in 2013 is $5,500 for those under age 50, and $6,500 for those over 50. All contributions must be from income.