All-in-all, Roth IRAs offer certain people a great way to save for retirement, and this year, you can save even more. The IRS has increased contribution limits on IRAs for 2024, along with raising 401(k) contribution limits.
Here's what you need to know about 2024 Roth IRA contribution and income limits.
2024 Roth IRA contribution limits and income limits
The maximum amount you can contribute to a Roth IRA for 2024 is $7,000 (up from $6,500 in 2023) if you're younger than age 50. If you're age 50 and older, you can add an extra $1,000 per year in "catch-up" contributions, bringing the total contribution to $8,000. The catch-up contribution was also $1000 in 2023.
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The actual amount that you are allowed to contribute to a Roth IRA is based on your income. To be eligible to contribute the maximum amount in 2024, your modified adjusted gross income (MAGI) must be less than $146,000 (up from $138,000 last year) if single or between $230,000 and $240,000 (up from between $218,000 and $228,000 last year) if married and filing jointly.
Contributions begin phasing out above those amounts, and you can't put any money into a Roth IRA once your income reaches $161,000 if a single filer or $240,000 if married and filing jointly.
Roth IRAs vs. traditional IRAs
Unlike contributions to a traditional IRA, which may be tax-deductible, a Roth IRA has no up-front tax break. Money goes into the Roth after it has already been taxed. But when you start pulling money out in retirement, your withdrawals will be tax-free.
Also, Roths — unlike traditional IRAs — are not subject to required minimum distributions (RMDs) after age 72.
Roths are also more flexible than traditional, deductible IRAs. You can withdraw contributions from a Roth account anytime, tax- and penalty-free. If you want to withdraw earnings tax-free, though, you must be at least age 59-1/2, and you must have owned the Roth for at least five years. The clock on the five-year holding period starts ticking on January 1 of the year you open the account.
You can open a Roth IRA through a bank, brokerage, mutual fund or insurance company, and you can invest your retirement money in stocks, bonds, mutual funds, exchange-traded funds and other approved investments. You have until the federal tax filing deadline to make your Roth IRA contribution for the prior year.
Is a Roth IRA right for you?
There isn't a minimum age limit to open a Roth IRA, and you can contribute to another person's Roth account as a gift — perfect for parents looking to kick-start a child's retirement savings. Two caveats: Recipients must have earned income, and you can only contribute an amount up to that person's annual earnings or $7,000, whichever is less.
Financial experts generally recommend Roths for people who anticipate a greater tax burden in retirement, whether because of rising income or higher tax rates in general. By paying the taxes on those contributions while your income or tax rate is lower, you’ll reap the benefit of tax-free money later when it counts more. This is especially true for someone who plans to retire in 2026 or later. Unless Congress intervenes, current income tax rates are supposed to sunset at the end of 2025 and revert to 2017 income tax rates beginning January 1, 2026. If that happens, here’s a sample of what you can expect: The current 12% rate becomes 15%, the 22% rate rises to 25%, and the 24% rate jumps to 28%.
Roths can also provide valuable tax diversification in retirement and can be a great way to balance other sources of income, such as withdrawals from a 401(k) or Roth IRA and Social Security payments. For instance, those tax-free Roth withdrawals in retirement won’t contribute to your taxable income, which is used to determine how much you pay for Medicare, including any surcharges (also known as income-related monthly adjustment amounts or IRMAAs).
Finally, note that if you invest in both a Roth IRA and a traditional IRA, the total amount of money you contribute to both accounts can't exceed the annual limit. If you do exceed it, the IRS might hit you with a 6% excessive contribution penalty.
Roth IRA savings tips
To make the most of saving for retirement in your Roth IRA:
- Max out your contributions. For each year that you're able, aim to hit the $7,000 limit.
- Once you turn 50, add another $1,000 to that limit annually. You can add funds to your Roth for as long as you have earnings from work.
- Avoid withdrawing funds you contributed to your account, even though you can do so without penalties or taxes. Letting that money grow in the account over many years means a bigger nest egg in retirement.
Related Content
- Roth 401(k) Contribution Limits For 2024
- Higher IRA and 401(k) Contribution Limits for 2024
- 457 Contribution Limits for 2024
FAQs
Roth IRA contributions are made on an after-tax basis.
What are the Roth IRA restrictions for 2024? ›
The Roth IRA contribution limit for 2024 is $7,000 for those under 50, and an additional $1,000 catch up contribution for those 50 and older. Source: "401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000," Internal Revenue Service, November 1, 2023.
What is the catch up contribution for 2024? ›
Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions. Annual catch-up contributions up to $7,500 in 2023 and 2024 ($6,500 in 2021-2020; $6,000 in 2015 - 2019) may be permitted by these plans: 401(k) (other than a SIMPLE 401(k))
What is the Roth IRA limit for 2025? ›
Beginning in 2025, the annual total contribution limits to an IRA will be raised to $10,000 for taxpayers between the ages of 60 and 63. Exceptions for making early withdrawals without a penalty have been expanded.
What is the maximum contribution to the IRS in 2024? ›
The basic limit on elective deferrals is $23,000 in 2024, $22,500 in 2023, $20,500 in 2022, $19,500 in 2020 and 2021, and $19,000 in 2019, or 100% of the employee's compensation, whichever is less.
Is Backdoor Roth still allowed in 2024? ›
Another option, if your employer's plan offers it, is the mega backdoor Roth. Under this option you would make after-tax contributions into your employer's 401(k) plan. For 2024 the limit for these after-tax contributions is $46,000.
Can each spouse contribute $6,000 to Roth IRA? ›
In the case of married individuals, both spouses' combined contributions can't exceed the total taxable income for the household. In most cases, you and your spouse can each contribute $7,000 to an IRA, for total contributions of $14,000.
What is Roth IRA's catch-up contribution? ›
Once you reach age 50, catch-up provisions in the tax code allow you to increase your tax-advantaged savings in several types of retirement accounts. For a traditional or Roth IRA, the annual catch-up amount is $1,000, which boosts your total contribution potential to IRAs to $8,000 in 2024.
What is the defined contribution limit for 2024? ›
The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2024 from $66,000 to $69,000. The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of section 415(b)(1)(A).
What is the income limit for a Roth IRA? ›
The Roth IRA income limit to make a full contribution in 2024 is less than $146,000 for single filers, and less than $230,000 for those filing jointly. If you're a single filer, you're eligible to contribute a portion of the full amount if your MAGI is $146,000 or more, but less than $161,000.
Beginning in 2026, if your wages are higher than $145,0000, any catch-up contributions you make will have to be done after taxes to a designated Roth account, which means you won't get a tax deduction. Here's what you need to know as you update your retirement savings plans between now and then.
Does Roth IRA have a 5 year rule? ›
This rule for Roth IRA distributions stipulates that five years must pass after the tax year of your first Roth IRA contribution before you can withdraw the earnings in the account tax-free.
What are the changes in Roth 401k in 2024? ›
Roth 401(k) contribution limits 2024
As Kiplinger has reported, If you are younger than 50, the maximum amount you can contribute to a Roth 401(k) for 2024 is $23,000. (That contribution limit is up $500 from 2023. ) For 2024 "catch-up" contributions, the maximum contribution is $30,500.
What are the Roth IRA rules for 2024? ›
The maximum amount you can contribute to a Roth IRA for 2024 is $7,000 (up from $6,500 in 2023) if you're younger than age 50. If you're age 50 and older, you can add an extra $1,000 per year in "catch-up" contributions, bringing the total contribution to $8,000.
Will IRA contribution limits increase in 2024? ›
Highlights of changes for 2024. The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan is increased to $23,000, up from $22,500. The limit on annual contributions to an IRA increased to $7,000, up from $6,500.
What is the 2024 catch-up contribution? ›
What are the 2024 401(k) catch-up limits? The IRS has said the 401(k) catch-up contribution limit for employees aged 50 and the limit for those who participate in 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan, will remain at $7,500 for 2024.
What is the retirement limit for 2024? ›
For the tax year 2024, the maximum amount that an employee can contribute to their 401(k) retirement plan is $23,000. That is $500 more than you were allowed to contribute in 2023.
What is the 5 year restriction on Roth IRA? ›
This rule for Roth IRA distributions stipulates that five years must pass after the tax year of your first Roth IRA contribution before you can withdraw the earnings in the account tax-free.
What is the simple IRA limit for 2024? ›
For 2024, the annual contribution limit for SIMPLE IRAs is $16,000, up from $15,500 in 2023. Workers age 50 or older can make additional catch-up contributions of $3,500, for a total of $19,500.
