IRA Contribution 2024: Rules, Limits, and Deadlines

An Individual Retirement Arrangement, or IRA, is a personal savings plan that offers tax advantages to accumulate funds for retirement. The specifics of how much can be contributed and who is eligible can change, making it important to understand the annual adjustments to these rules for the 2024 tax year.

2024 IRA Contribution Limits and Deadlines

For the 2024 tax year, the maximum amount an individual can contribute to all of their IRAs combined is $7,000. This limit applies to the total contributions made to both Traditional and Roth IRAs, meaning you cannot contribute the full amount to each if you hold both types of accounts. The total across all accounts must not exceed this annual cap.

Individuals who are age 50 or over at any point during the year are permitted to make an additional “catch-up” contribution. For 2024, this additional amount is $1,000, bringing their total possible contribution for the year to $8,000. This provision allows those nearer to retirement to increase their savings.

The deadline for making contributions for the 2024 tax year is the same as the tax filing deadline, which is April 15, 2025. It is not necessary to have filed your tax return to make your contribution; the payment simply needs to be made by this date.

| Contribution Type | 2024 Limit |
| — | — |
| Standard Contribution (Under Age 50) | $7,000 |
| Catch-Up Contribution (Age 50+) | $1,000 |
| Total Possible Contribution (Age 50+) | $8,000 |

Traditional IRA Contribution Rules

A Traditional IRA allows individuals to make contributions that may be tax-deductible. The earnings on these contributions can grow tax-deferred until they are withdrawn during retirement. Whether a contribution is deductible depends on the individual’s income and whether they or their spouse are covered by a retirement plan at work, such as a 401(k).

The ability to deduct Traditional IRA contributions is subject to income limitations based on your Modified Adjusted Gross Income (MAGI). For 2024, a single filer covered by a workplace retirement plan will see their deduction phased out if their MAGI is between $77,000 and $87,000. For those married and filing jointly, where the contributing spouse is covered by a workplace plan, the phase-out range is $123,000 to $143,000.

If an individual is not covered by a workplace retirement plan but their spouse is, the deductibility phase-out range for a joint return is between $230,000 and $240,000 for 2024. Individuals who are not covered by a workplace plan can deduct their full contribution regardless of their income. It is also possible to make non-deductible contributions, which are made with after-tax dollars.

| Filing Status & Workplace Plan Coverage | 2024 MAGI Phase-Out Range for Deductibility |
| — | — |
| Single, covered by a workplace plan | $77,000 – $87,000 |
| Married Filing Jointly, contributor covered by a plan | $123,000 – $143,000 |
| Married Filing Jointly, spouse covered by a plan | $230,000 – $240,000 |

Roth IRA Contribution Rules

A Roth IRA differs from a Traditional IRA in its tax treatment. Contributions are made with after-tax dollars, meaning there is no upfront tax deduction. The benefit of a Roth IRA is that qualified distributions, including both contributions and earnings, are tax-free in retirement. This can be advantageous for those who anticipate being in a higher tax bracket in their later years.

Eligibility to contribute directly to a Roth IRA is determined by your Modified Adjusted Gross Income (MAGI). The ability to contribute to a Roth IRA is phased out at certain income levels. For 2024, a single filer’s ability to contribute is reduced if their MAGI is between $146,000 and $161,000, and it is eliminated if their MAGI exceeds $161,000.

For those who are married and filing a joint tax return, the income phase-out range for 2024 is between $230,000 and $240,000. If your MAGI falls within this range, you can make a partial contribution. If your income is above $240,000, you cannot contribute to a Roth IRA for that year.

| Filing Status | 2024 MAGI Phase-Out Range for Contributions |
| — | — |
| Single or Head of Household | $146,000 – $161,000 |
| Married Filing Jointly or Qualifying Widow(er) | $230,000 – $240,000 |
| Married Filing Separately | $0 – $10,000 |

Addressing Excess Contributions

An excess contribution occurs when you contribute more to your IRAs than the legal limit for the year. This can happen by exceeding the annual maximum or by contributing to a Roth IRA when your income is above the eligibility threshold. The IRS imposes a penalty on these uncorrected excess amounts.

If an excess contribution is not corrected, it is subject to a 6% excise tax for each year it remains in the account. This tax is reported and paid using IRS Form 5329. The penalty continues to apply annually until the excess is removed.

The most direct way to fix this error is to withdraw the excess contribution, along with any investment earnings it has generated, before the tax filing deadline for the year of the contribution. For a 2024 excess contribution, this means removing the funds by April 15, 2025. Withdrawing the excess amount by this deadline allows you to avoid the 6% excise tax.

When you withdraw the excess, you must also withdraw any income or gains earned on that specific amount while it was in the account. These earnings must be reported as taxable income for the year the contribution was made. The financial institution holding your IRA can help calculate the earnings that need to be withdrawn.