2024 IRA Contribution and Income Limits

If you use traditional or Roth IRAs to save for retirement, the IRS has stated you can file away an additional $500 to either account in 2024. Unlike contribution limits for 401(k)s, IRA contribution limits usually don’t rise much from year to year; however, this is the second consecutive year of increases. The total contribution limit for IRAs in 2024 is $7,000. The deal gets sweeter for those aged 50 and older, who can contribute an additional $1,000.

The income ranges on IRAs are also higher in 2024, allowing you to earn more money and still leverage the tax advantages of the plan. (Workplace retirement plans such as 401(k)s and 403(b)s also got a slight increase, thanks to annual adjustments, but more on that later.) Here’s what you need to know to maximize your retirement savings in 2024.

2024 IRA Contribution Limits

For all IRA types, you can contribute up to $7,000 in 2024 ($8,000 if you’re 50 and older).

The contribution limit on a SIMPLE IRA, another workplace plan, also increased to $16,000 from $15,000 in 2023. Remember, if you pay IRA brokerage fees, the cost counts toward your annual contribution limit.

2024 IRA Income Limits Increase Are Also Higher

The ability to contribute the maximum amount allowed to a Roth IRA is dependent on your income. For example, singles who make less than $146,000 annually can contribute the full $7,000, but singles who make more than $161,000 cannot contribute anything to an IRA.

Filing status	Maximum Income for Full Contribution to Roth IRA	No Contribution Allowed
Single, head of household	$146,000	$161,000
Married filed jointly	$230,000	$240,000

If you put money in a traditional IRA, you may be able to take a tax deduction for some or all of your contributions if your income is below a certain amount.

Filing status	Maximum Income for Full Deduction to Traditional IRA	No Contribution Allowed
Single, head of household	$77,000	$87,000
Married filed jointly	$123,000	$143,000

The IRS doesn’t allow you to put more than your annual income from employment into an IRA. If you earn less than $6,500, you can put all of your income into the retirement savings account. The same applies if you are over 50 and earn $7,500.

IRA Contributions for High-Income Earners

If you make more money, your income level can reduce or disqualify you from investing in a Roth IRA. However, the amount of your tax deduction for contributions diminishes as your income increases. You lose the deduction altogether in 2024 if you earn more than $161,000 (single) or $240,000 (married filing jointly).

If your income is too high for a tax deduction, you can still save money using a nondeductible IRA. Here, you’ll make contributions with after-tax dollars, investments grow tax-free and distributions aren’t taxed during retirement. If you’re interested in a broader range of investments, consider a Gold IRA or other self-directed IRA.

Investors can also consider a backdoor IRA as a workaround to the Roth IRA income limit. Backdoor IRAs are compliant with IRS rules, though we recommend chatting with your financial advisor to formulate a smart retirement strategy based on your income and retirement goals.

2024 Spousal IRA Contributions

Two spouses earning income from employment (not investment and other passive income) can each have a separate IRA. Each partner can contribute up to $7,000 ($8,000 if they’re over the age of 50). The total combined household contribution maxes out at $14,000 or $16,000 depending on age.

Spouses who are not employed can still establish a traditional IRA if the other spouse is working. Married couples qualify for spousal IRA contributions if they file a joint return. Household taxable income must be equal to or higher than the total contribution amount.

What About 401(k) Contribution Limits?

Contribution limits for 401(k), 403(b), most 457 plans, and the Thrift Savings Plan will also increase by $500 for 2024. Eligible taxpayers can contribute $23,000 to these accounts in 2024. 

For those 50 and older, the catch-up contribution limit remains unchanged at $7,500. This means you can contribute up to $30,500 if you’re 50 and older.

If You Overcontribute to an IRA

Keep track of how much you’re putting into the account, especially if you use a self-directed IRA. You’ll pay income tax on IRA contributions over the annual limit at a 6% rate. The taxation continues as long as the funds remain in your account.

• To avoid the tax, you must withdraw the excess amount and any associated investment income. Include Form 5329 with your tax return and include the earnings in your gross income.
• If you discover the overage after you file your annual return, you have six months to file an amended return. After that time, you will pay the 6% penalty.
• Alternatively, you could shift the contributions to the following year. This strategy, called recharacterization, wipes out the overage. Just be sure to adjust contributions for the next year.

Bottom Line: Using an IRA to Save for Retirement

Opening an IRA is a great way to build retirement savings. IRA contributions are tax-deductible, meaning you’ll pay taxes at a lower rate in retirement when you take a distribution. However, the contributions and income limits stated above apply.

IRS guidelines are fairly straightforward for most people, you should speak to a financial advisor to ensure you maximize your savings while avoiding taxes or penalties—especially if you are self-employed or have unusual tax circumstances.