What Is the Maximum IRA Contribution for 2024?

An Individual Retirement Arrangement, or IRA, is a personal savings plan with tax advantages for retirement funds. The Internal Revenue Service (IRS) governs these accounts and establishes how much a person can contribute each year. These regulations are subject to change, making it important to understand the annual limits for effective financial planning.

2024 IRA Contribution Limits

For the 2024 tax year, the maximum amount an individual can contribute to all of their IRAs is $7,000. This limit applies to the combined total of contributions made to both Traditional and Roth IRAs, meaning you cannot contribute the full amount to each type of account separately.

Individuals who are age 50 or over by the end of the year can make an additional “catch-up” contribution. For 2024, this additional amount is $1,000. This raises the total possible contribution for someone age 50 or older to $8,000 for the year.

This aggregate limit means savers must be mindful of their total deposits if they hold multiple IRA accounts. For instance, a person under age 50 could contribute $4,000 to a Traditional IRA and $3,000 to a Roth IRA in 2024, reaching their $7,000 total limit. Savers must track their contributions to ensure they do not exceed the legal maximum.

Income Restrictions on Contributions

A person’s income level impacts their ability to contribute to a Roth IRA or deduct contributions to a Traditional IRA. For Roth IRAs, eligibility is determined by Modified Adjusted Gross Income (MAGI). If your MAGI is below the specified range for your filing status, you can contribute the maximum amount. If your income falls within the phase-out range, you can make a partial contribution, and if it exceeds the range, you cannot contribute at all.

For 2024, the Roth IRA MAGI phase-out ranges are $146,000 to $161,000 for those filing as Single or Head of Household; $230,000 to $240,000 for Married Filing Jointly; and $0 to $10,000 for Married Filing Separately.

The rules for deducting Traditional IRA contributions depend on whether you or your spouse are covered by a retirement plan at work, such as a 401(k). If neither of you is covered, your contributions are fully deductible regardless of income. If you are covered by a workplace plan, your ability to deduct contributions is phased out based on your MAGI.

For 2024, the Traditional IRA deduction MAGI phase-out ranges for those covered by a workplace plan are $77,000 to $87,000 for Single or Head of Household filers; $123,000 to $143,000 for Married Filing Jointly; and $0 to $10,000 for Married Filing Separately.

A special rule applies if you are not covered by a workplace plan but your spouse is. In this scenario, the MAGI phase-out range for your deduction is $230,000 to $240,000 for 2024. Even if your contribution is not deductible due to income, you can still make a non-deductible contribution up to the annual limit.

Rules for Making Contributions

The deadline to contribute to an IRA for any given tax year is the same as the tax filing deadline for that year, which is April 15 of the following year. For 2024 contributions, the deadline is April 15, 2025. This deadline does not change even if you file for an extension on your income taxes.

You must have eligible compensation to make a contribution, and the amount you contribute cannot exceed your compensation for the year. Eligible compensation includes wages, salaries, commissions, tips, and net earnings from self-employment. Income from sources like investments or pensions does not qualify for making IRA contributions.

A provision known as a spousal IRA allows a working spouse to make contributions to an IRA on behalf of their non-working or low-earning partner. To qualify, the couple must file a joint tax return, and their combined earned income must be at least equal to the total contributions made for both spouses.

Correcting Excess Contributions

Contributing more to your IRA than the annual limit allows results in an excess contribution. The IRS imposes a 6% penalty tax on this excess amount for each year the funds remain in the account. The penalty is calculated and paid using IRS Form 5329.

To correct this mistake and avoid the penalty, you can withdraw the excess contribution and any investment earnings it generated. This must be done before the tax filing deadline for the year the contribution was made. For example, to correct an excess contribution for 2024, you would need to withdraw the funds by April 15, 2025, or the extended tax deadline if you file an extension.

You must also withdraw any income earned on the excess amount. These earnings are considered taxable income in the year the excess contribution was made. Properly withdrawing the excess and its earnings by the deadline allows you to avoid the 6% penalty tax.