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The contribution limit for individual retirement accounts (IRAs) for the 2024 tax year is $7,000. If you are 50 and older, you can contribute an additional $1,000 for a total of $8,000. This includes contributions for both Roth IRAs and traditional IRAs. But there are restrictions that could affect how much you can contribute and what you can deduct on your tax return.
Key Takeaways
- The combined annual contribution limit for Roth and traditional IRAs for the 2024 tax year is $7,000, or $8,000 if you're age 50 or older. Those limits reflect an increase of $500 over the 2023 limit of $6,500 ($7,500 if you are 50 or older).
- That is a combined maximum, which means the limit is the same if you have more than one IRA.
- You can only contribute earned income to an IRA.
- Roth IRA contribution limits are reduced or eliminated at higher incomes.
- Traditional IRA contributions are deductible, but the amount you can deduct may be reduced or eliminated if you or your spouse are covered by a retirement plan at work.
IRA Contribution Limits
As noted above, there are limits to how much you can contribute to your retirement accounts, including IRAs. These limits are set and adjusted for inflation annually and are published by the Internal Revenue Service (IRS).
The maximum contribution limit for Roth and traditional IRAs for 2024 is:
- $7,000 if you're younger than age 50
- $8,000 if you're age 50 or older
The maximum contribution limit for both types of IRAs for 2023 is:
- $6,500 if you're younger than age 50
- $7,500 if you're age 50 or older
You have until the filing deadline of the following year to contribute to an IRA.So you can contribute to your IRA for 2023 until Monday, April 15, 2024. The maximum contribution for 2023 is $6,500, but if you are age 50 or over, it is $7,500.
You Can Only Contribute Earned Income
You must have earned income to contribute to an IRA. There are two ways to get earned income: work for someone else who pays you, owns, or runs a business or farm. The IRS has a list of what's included in earned income and what's excluded, which is highlighted in the table below.
What's Included and Excluded from Earned Income | |
---|---|
Included | Excluded |
Wages and Salaries | Earnings and Profits From Property |
Commissions | Interest Income |
Tips | Dividend Payments |
Self-Employment Income | Pensions |
Taxable Alimony and Separation Settlements | Annuity Income |
Taxable Non-Tuition Fellowships | Deferred Compensation |
Stipend Payments | Income from Some Partnerships |
Non-Taxable Combat Pay | Amounts Excluded from Income |
The IRS considers income from alimony and separation settlements as earned income as long as the decrees are executed on or before Dec. 31, 2018. Income from partnerships is excluded if the services you provided didn't generate any material income. Amounts excluded from your income may include any foreign-earned income.
For 2024, you can contribute as much as $7,000 to an IRA or $8,000 if you're age 50 and older. For 2023, the contribution limit is $6,500, or $7,500 if you're 50 or over. But you must have enough earned income to cover the contribution.
If your earned income for the year is less than the contribution limit, you can only contribute up to your earned income. For example, if you earned $3,000, you can contribute a maximum of $3,000.
Spousal IRAs
If you don't have earned income but your spouse does, you can open what's called a spousal IRA. These accounts allow a person with earned income to contribute on behalf of their spouse, who doesn't work for pay.
You can structure a spousal IRA as a traditional or Roth IRA. Either way, the spouse with earned income can contribute to the IRAs of both spouses, provided they have enough earned income to cover both contributions.
To be eligible for a spousal IRA, you must be married and file a joint tax return.
Roth IRA Income Limits
You can contribute to a traditional IRA regardless of how much money you earn. But you're not eligible to open or contribute to a Roth IRA if you make too much money. Here's a rundown of the 2023 and 2024 Roth IRA income and contribution limits, based on your filing status and modified adjusted gross income (MAGI):
2023 and 2024 Roth IRA Income Limits | |||
---|---|---|---|
Filing Status | 2023 Modified AGI | 2024 Modified AGI | Contribution Limit |
Married filing jointly or qualifying widow(er) | Less than $218,000 | Less than $230,000 | Full contribution |
$218,000 to $228,000 | $230,000 to 240,000 | Reduced | |
$228,000 or more | $240,000 or more | Not eligible | |
Single, head of household, or married filing separately (and you didn't live with your spouse at any time during the year) | Less than $138,000 | Less than $146,000 | Full contribution |
$138,000 to $153,000 | $146,000 to $161,000 | Reduced | |
$153,000 or more | $161,000 or more | Not eligible | |
Married filing separately (if you lived with your spouse at any time during the year) | Less than $10,000 | Less than $10,000 | Reduced |
$10,000 or more | $10,000 or more | Not eligible |
There are still ways around the Roth IRA contribution limits. If you make a contribution to a nondeductible IRA, you can convert it to a Roth IRA. The same applies to nondeductible contributions made to a 401(k) plan.
Of course, any strategy with tax implications should be reviewed by a qualified tax professional.
If you make too much money, you may still be able to contribute to a Roth IRA using a strategy called a backdoor Roth IRA.
Traditional IRA Deduction Limits
Unlike Roth IRAs, there are no income limits with traditional IRAs. And you can deduct your contributions in full if you and your spouse don't have a 401(k) or some other retirement plan at work.
If either one of you is covered by a plan at work, however, the deduction may be reduced or eliminated. Here's the full rundown of IRA deduction limits for 2023 and 2024:
2023 and 2024 Traditional IRA Deduction Limits | |||
---|---|---|---|
If your filing status is… | And your 2023 Modified AGI is... | And your 2024 Modified AGI is... | Then you can take… |
Single, head of household, qualifying widow(er), married filing jointly or separately and neither spouse is covered by a plan at work | Any amount | Any amount | A full deduction up to the amount of your contribution limit |
Married filing jointly or qualifying widow(er) and you're covered by a plan at work | $116,000 or less | $123,000 or less | A full deduction up to the amount of your contribution limit |
Between $116,000 and $136,000 | Between $123,000 and $143,000 | A partial deduction | |
$136,000 or more | $143,000 or more | No deduction | |
Married filing jointly and your spouse is covered by a plan at work | $218,000 or less | $230,000 or less | A full deduction up to the amount of your contribution limit |
Between $218,000 and $228,000 | Between $230,000 and $240,000 | A partial deduction | |
More than $228,000 | More than $240,000 | No deduction | |
Single or head of household and you're covered by a plan at work | $73,000 or less | $77,000 or less | A full deduction up to the amount of your contribution limit |
Between $73,000 and $83,000 | Between $77,000 and $87,000 | A partial deduction | |
More than $83,000 | More than $87,000 | No deduction | |
Married filing separately and either spouse is covered by a plan at work | Less than $10,000 | Less than $10,000 | A partial deduction |
$10,000 or more | $10,000 or more | No deduction |
Modified Adjusted Gross Income (MAGI)
The IRS uses your MAGI when it comes to IRA limits. This number can be close (or identical) to your adjusted gross income (AGI). It takes your AGI and adds back certain deductions, including:
- Half of any self-employment taxes
- IRA contributions and Social Security
- Losses from a publicly-traded partnership
- Passive income or loss
- Qualified tuition expenses
- Rental losses
- Student loan interest
- The exclusion for adoption expenses
- The exclusion for income from U.S. savings bonds
- Tuition and fees
To calculate your MAGI, find your AGI from your tax return. It's on line 11 of Form 1040: U.S. Individual Tax Return Definition, Types, and Use. Then, use Appendix B, Worksheet 1 from IRS Publication 590-A to modify your AGI for IRA purposes.
What If You Contribute Too Much?
It's good to max out your IRA contributions. But if you go overboard, the IRS considers it an ineligible (or excess) contribution. If you contribute too much or contribute to a Roth when your income is too high, you'll owe a 6% penalty on the excess contribution each year until you fix the mistake.
The good news is that there are several ways to fix your mistake:
- Withdraw the excess contribution and any earnings on it before the April tax deadline.
- If you've already filed your tax return, remove the excess contribution and earnings and file an amended tax return by the October deadline.
- Apply the excess to next year's contribution. You'll still pay the 6% penalty this year, but you'll be set going forward.
Of course, it's best to avoid excess contributions altogether. Be sure to pay attention to the IRS' contribution limits for the year, keep track of your contributions, and watch your income. Just because you were eligible to contribute last year, it doesn't mean you still are.
The Saver's Credit
Many people with low to moderate incomes aren't even aware of the saver's credit, a dollar-for-dollar reduction of the taxes you owe. It was put into place in the early 2000s.
You could earn a credit of 10%, 20%, or 50% of your contributions, up to a dollar amount of $2,000 ($4,000 if married filing jointly) as long as you're eligible. Thesaver's creditis available to individuals, heads of households, and joint filers who contribute to an IRA, 401(k), or any other qualified retirement account, and whose adjusted gross income falls within certain parameters. You must be over 18, not a full-time student, and not listed as a dependent on anyone else's tax return to qualify.
The income thresholds are adjusted annually. Here are the saver's credit rates for 2023 and 2024:
2023 and 2024 Saver's Credit | |||
---|---|---|---|
Credit | Married Filing Jointly | Head of Household | All Other Filers |
50% | 2023: AGI $43,500 or less 2024: AGI $46,000 or less | 2023: AGI $32,625 or less 2024: AGI $34,500 or less | 2023: AGI $21,750 or less 2024: AGI $23,000 or less |
20% | 2023: $43,501 to $47,500 2024: $46,001 to $50,000 | 2023: AGI $32,626 to $35,625 2024: $34,501 to $37,500 | 2023: $21,751 to $23,750 2024: $23,001 to $25,000 |
10% | 2023: $47,501 to $73,000 2024: $50,001 to $76,500 | 2023: $35,626 to $54,750 2024: $37,501 to $57,375 | 2023: $23,751 to $36,500 2024: $25,001 to $38,250 |
0% | 2023: More than $73,000 2024: More than $76,500 | 2023: More than $54,750 2024: More than $57,375 | 2023: More than $36,500 2024: More than $38,250 |
A married couple with an AGI of, say, $60,000 could save $400 on their 2024 tax bill by contributing $2,000 to each ($4,000 total) of their IRAs (the 10% level). If they managed to contribute $4,000 with an income below $46,000, their tax credit would be $2,000 (50% of their contributions).
What Is the Contribution Deadline?
The contribution deadline for the previous year is the tax filing deadline. For example, the contribution deadline for 2023 is April 15, 2024.
Can a Minor Contribute to an IRA?
Yes, someone under the age of 18 can contribute to a Roth IRA or traditional IRA provided they meet the earned income requirements and do not earn over the income limits. However, opening the account will require a parent or guardian to be the custodian of the account.
What Is a Spousal IRA?
A spousal IRA is an IRA opened for a spouse with no earned income of their own, usually from providing unpaid labor to their household. To contribute to a spousal IRA, you must be married filing a joint tax return with enough earned income to cover both contributions.
Can You Get a Company Match on Your IRA Contributions?
If you have a SIMPLE IRA, yes, you can get a company match. For a traditional IRA or Roth IRA, you cannot get a direct company match on your contributions, but some employers do offer incentives for employees who open or contribute to an IRA, like a gift card or other bonus.
The Bottom Line
Contribution limits apply to other types of IRAs, as well. For the self-employed and small business owners, the contribution limit forSimplified Employee Pension (SEP) IRAs and solo 401(k) plansis 25% of compensation, up to $69,000 in 2024, a $3,000 increase from 2023.
If you have a Savings Incentive Match Plan (SIMPLE) IRA, you can make salary deferrals (salary reduction contributions) up to $16,000 for 2024, a $500 increase from 2023. If you're age 50 or older, you can add an extra $3,500.
Any type of IRA is an excellent way to save for retirement. But to take full advantage of these accounts—and avoid any trouble or penalties—be sure to follow the rules for contribution, income, and deduction limits. The limits change periodically, so check back each year to make sure you comply.
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
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