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Roth IRA contributions 2024

Roth IRA contributions 2024

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Updated: July 22, 2024

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For 2024, the maximum amount of money a person can contribute to their Roth IRA is $7,000. This number is up from $6,500 in 2023, although the IRS does change the contribution limit every few years (this is to keep up with inflation).

If you are 50 years old or older, you can contribute an additional $1,000, making your total annual contribution $8,000. This exception is designed for older people who started investing late. But people who want to pad their retirement accounts before leaving the workforce can also contribute this maximum.

There are income limits for Roth IRAs. If you make over a certain amount, you can no longer fund this account. These income limits are based on your tax status and adjusted gross income.

Single filers with a modified adjusted gross income (MAGI) of less than $146,000 can make the full contribution. Those with a MAGI between $146,000 and $161,000 are eligible for a partial contribution, and those earning $161,000 or more are not eligible to contribute to a Roth IRA. 

For married couples filing jointly, the full contribution is available to those with a MAGI of less than $230,000. A partial contribution is allowed for those with a MAGI between $230,000 and $240,000, and those earning $240,000 or more are ineligible. Married individuals filing separately can make a partial contribution if their MAGI is less than $10,000, but those with a MAGI of $10,000 or more cannot contribute to a Roth IRA.

We've broken down the 2024 contribution rules into three tables.

Single or head of household

MAGI Maximum annual contribution
Less than $146,000 $7,000 ($8,000 for age 50+)
$146,000 - $161,000 Reduced contribution
$161,000 and up No allowed contribution

Married filing jointly or qualifying widow(er)

MAGI/Married Maximum annual contribution
Less than $230,000 $7,000 ($8,000 for age 50+)
$230,000 - $240,000 Reduced contribution
Above $240,000 No allowed contribution

Married filing separately

MAGI/Married individuals filing separately Maximum annual contribution
Less than $10,000 Reduced contribution
$10,000 and up No allowed contribution

What are the withdrawal rules?

You can withdraw the money that you contribute to a Roth IRA at any point. Say you contributed $4,000 to a Roth in 2023, and the market earns you $500. You can take out the $4,000 at any time without having to pay any taxes, penalties or fees. The government allows this because you've already paid tax on your contributions.

If you want to take out the $500 of market returns (your earnings), you can do that, but it may come with fees and taxes. If you've had the account for over five years and one of the four following scenarios exists, you're exempt from fees and taxes when the market earnings are withdrawn:

  • You are 59.5 years old or older
  • You withdraw up to $10,000 for a first-time home purchase
  • You've become disabled
  • You pass away and your inheritor is withdrawing the money

If you want to withdraw your market earnings from your Roth for any other reason, you’ll pay a 10% tax rate as a penalty on top of your current tax rate. Avoid withdrawing your IRA because these taxes and fees can add up. Plus, taking money out of the market means you lose your chance for further market growth.

Now, when it comes to regular withdrawals (not early ones), there are no required minimum distributions like there are for traditional IRAs and 401(k) accounts. You can leave the money in your Roth IRA once you reach retirement age. This means your money can keep growing in the market.

Who can open a Roth IRA?

A Roth IRA can be opened by anyone at least 18 years old with earned income. Earned income means money that you can prove to the government that you earned, like a job at your local grocery store. It doesn't usually imply money earned "under the table" (off the record), like the kind you make babysitting.

If you don't have earned income but want to open a Roth IRA at 18, you can open one with an adult who does have earned income. For example, parents who work can open a Roth IRA with their child. The brokerage will use the employment history of the parents to open the account, but the child will have full access to the account and funds.

IRAs are designed to be available to many people. Many retirement accounts are linked to employment (like a workplace-sponsored 401(k), but IRAs are not. The Roth IRA eligibility is purposely broad.

FAQs

  • How do taxes play into a Roth IRA?

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    You pay tax on your Roth IRA contributions in the year you make them. In retirement, you do not have to pay tax on the money you withdraw from the account.

  • Can I have both a Roth and a traditional IRA?

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    Yes, you can have both a Roth and a traditional IRA and contribute to both accounts in the same year. However, you must make sure that your combined contribution doesn't exceed the maximum of $7,000 (or $8,000 if you're older than 50).

  • Can I have both a Roth IRA and a 401(k)?

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    Yes, you contribute up to the maximum in each type of plan.

  • What if my income is too high for a Roth IRA?

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    There's a trick you can use that can let you legally still invest in a Roth IRA. It's called the “backdoor” method.

  • Is a Roth IRA right for me?

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    A Roth IRA is generally best for people in lower income tax brackets during their earning years and expect to be in a higher tax bracket during their retirement years. Since you pay taxes upfront, the idea is to pay the taxes while you are in the lowest possible tax bracket.

    A Roth IRA is also a good idea for people who don’t have access to a retirement plan through work. It’s a great way to jumpstart your retirement savings, especially if you invest young.

    Since the Roth IRA rules around withdrawals are more forgiving than other retirement accounts (for both early and regular withdrawals), it can also act as an absolute last-ditch emergency fund. Generally, the advice from financial advisors and experts is to never withdraw money from retirement accounts before you need it, and that’s good advice. But if something terrible befalls your finances, it is easier to get money out of a Roth IRA than other accounts.

  • What is the maximum Roth IRA contribution for 2024?

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    For 2024, the maximum contribution limit for a Roth IRA is $7,000 for individuals under the age of 50. For those aged 50 and older, the limit is $8,000, which includes an additional $1,000 catch-up contribution. These limits apply to the total contributions made to all of your Roth IRAs and traditional IRAs combined, not each account individually.

  • What is the maximum contribution to traditional IRAs in 2024?

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    For 2024, the maximum contribution limit for traditional IRAs is $7,000 for individuals under the age of 50. For those aged 50 and older, the limit is increased to $8,000, which includes a $1,000 catch-up contribution. These limits apply to the total contributions made to all of your traditional and Roth IRAs combined, not each account individually.

  • What is the catch-up contribution for 2024?

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    The government has made it easier for older Americans to boost their savings by raising the IRA contribution limits based on their age. For 2024, the catch-up contribution limit for IRAs (both traditional and Roth) is $1,000. This means that individuals aged 50 and older can contribute an additional $1,000 on top of the standard contribution limit of $7,000, bringing their total allowable contribution to $8,000.

  • What is the IRA limit for 2025?

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    For 2025, the contribution limits for traditional and Roth IRAs are expected to be adjusted based on inflation, as stipulated by the IRS and the SECURE 2.0 Act. While the exact figures will be determined using the Consumer Price Index (CPI) for the fiscal year 2024, preliminary forecasts suggest that the standard contribution limit for IRAs will likely increase from the 2024 limit of $7,000 for individuals under 50 and $8,000 for those 50 and older, including the $1,000 catch-up contribution.

    Additionally, the SECURE 2.0 Act introduces significant changes to catch-up contributions for those aged 60 to 63, starting in 2025. These individuals will be allowed to make catch-up contributions up to the greater of $10,000 or 150% of the regular catch-up amount, which will be indexed for inflation in subsequent years. This is a notable increase aimed at helping older workers boost their retirement savings as they approach retirement age.

Chris Clark Freelance Contributor

Chris Clark is freelance contributor with MoneyWise, based in Kansas City, Mo. He has written for numerous publications and spent 18 years as a reporter and editor with The Associated Press.

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