What Are the Maximum Roth IRA Contribution Limits?

This article details the maximum contribution amounts for a Roth Individual Retirement Arrangement (IRA) for the 2024 tax year. A Roth IRA is a retirement savings account funded with after-tax dollars, meaning you pay taxes on the money before you contribute it. The primary benefit is that qualified withdrawals of both contributions and earnings in retirement are tax-free.

2024 Roth IRA Contribution Limits

For the 2024 tax year, the maximum amount an individual can contribute to a Roth IRA is $7,000. This limit applies to individuals who are under the age of 50 for the entirety of the tax year. The Internal Revenue Service (IRS) allows for adjustments to these limits to account for inflation and changes in the cost of living.

Individuals who are age 50 or over at any point during the tax year are permitted to make an additional “catch-up” contribution. For 2024, this additional amount is $1,000, bringing the total maximum contribution for this age group to $8,000.

These contribution limits are aggregated across all IRAs an individual owns. If you have both a Traditional IRA and a Roth IRA, your total contributions to both accounts combined cannot exceed the annual maximum applicable to your age. For example, a 45-year-old cannot contribute $7,000 to a Roth IRA and another $7,000 to a Traditional IRA in the same year; their combined total must not surpass $7,000.

Income-Based Contribution Rules

Your ability to contribute to a Roth IRA is directly tied to your Modified Adjusted Gross Income (MAGI). MAGI is calculated by taking your Adjusted Gross Income (AGI) from your tax return and adding back certain deductions, such as student loan interest. For most taxpayers, MAGI is very close or identical to their AGI.

The IRS establishes annual income phase-out ranges that dictate how much, if anything, you can contribute. If your MAGI is below the specified range for your filing status, you can contribute up to the full amount. If your MAGI falls within the range, your contribution limit is reduced, and if it is above the range, you cannot contribute to a Roth IRA for that year.

The 2024 MAGI phase-out ranges are as follows:

• Single or Head of Household: $146,000 to $161,000
• Married Filing Jointly or Qualifying Surviving Spouse: $230,000 to $240,000
• Married Filing Separately (and lived with spouse): $0 to $10,000

To calculate a reduced contribution, you can use a worksheet provided by the IRS in Publication 590-A. The calculation reduces your maximum contribution limit proportionally based on how far your MAGI falls into the phase-out range.

Consequences of Excess Contributions

An excess contribution occurs when you deposit more into your Roth IRA than you are legally allowed for a given year. Simply contributing the maximum $7,000 or $8,000 without verifying your income eligibility can inadvertently lead to an over-contribution.

The consequence of an excess contribution is a 6% excise tax imposed by the IRS. This tax is not a one-time penalty; it is levied on the excess amount for each year that it remains in the account. For instance, if you over-contributed by $2,000 and did not correct it, you would owe a $120 tax for the first year and another $120 for the second year if the funds are still there. The tax is reported on IRS Form 5329.

Correcting an Excess Contribution

The most common method to correct an excess contribution is to withdraw the excess amount, along with any net income it generated, before the due date of your tax return, including extensions. You must contact your IRA custodian to process this specific type of withdrawal. The earnings you withdraw are subject to income tax.

Another option is to apply the excess contribution to a future year’s contribution limit. To do this, you must contribute less than your maximum in the subsequent year to absorb the carried-forward amount. This method still requires you to pay the 6% excise tax for the year the excess remains in the account. For example, if you over-contributed for 2024, you would pay the tax on that amount for the 2024 tax year but would not owe the tax for 2025.