If you want to save more for retirement, you’ll be allowed to tuck away a little extra in an individual retirement account (IRA) next year. The IRS recently announced the 2024 IRA contribution limits, which are $500 more than the limits for 2023.

In 2024, you can contribute up to $7,000 to a traditional IRA, a Roth IRA, or a combination of the two. If you’re 50 or older, you can make an additional $1,000 catch-up contribution, or a total of $8,000.

Read on to learn about the 2024 IRA contribution limits and other rules you should know.

Read more: Retirement planning: A step-by-step guide

2023 and 2024 traditional IRA and Roth IRA contribution limits

The IRS adjusts the IRA contribution and income limits every year for inflation. Adjustments usually occur in $500 increments.

The IRA annual contribution limits apply to both Roth IRA and traditional IRAs. If you choose to save in both a Roth IRA and a traditional IRA, the most you can save between the two accounts in 2024 is $7,000 total (or $8,000 if you’re 50 or older).

Note that if your taxable wages are lower than these limits, you can only contribute the amount you earned. Suppose your earned income (money you earn from a job or self-employment) is $5,000 in 2024. Your maximum IRA contribution in 2024 would be $5,000, not $7,000.

One exception: If you don’t earn taxable compensation but you’re married and file a joint return with someone who earns money from working, you can contribute to a spousal IRA.

You can fund your IRA on whatever schedule you choose. If you contribute each month to make the maximum contribution, here’s what the monthly amounts look like and how they’ll change next year.

2023 and 2024 Roth IRA income limits

A Roth IRA is an individual retirement arrangement that you fund with after-tax money. As long as you wait until age 59 ? and you’ve held the account for at least five years, all Roth IRA distributions are tax-free. You can also withdraw your earnings (but not the contributions) at any time tax- and penalty-free. However, you will owe income taxes and a 10% penalty on most early withdrawals of earnings from a Roth IRA.

You can only contribute to a Roth IRA if your income falls below certain thresholds set by the IRS each year. Eligibility is based on your modified adjusted gross income (MAGI). For most people, that’s your adjusted gross income you calculate for your income tax return before you subtract any deduction for student loan interest.

2023 and 2024 traditional IRA deduction limits

A traditional IRA is a retirement account that allows you to deduct your contribution, depending on your income and whether you or your spouse is covered by a workplace plan. Those with higher incomes can take only partial deductions. Distributions are taxed at ordinary income rates. A 10% early withdrawal penalty typically applies to any distributions you take before age 59 ?.

There are no income limits that apply to traditional IRA contributions. However, income limits apply to traditional IRA deductions if you or your spouse are covered by a workplace retirement plan.

What’s the deadline to contribute to an IRA?

For both traditional and Roth IRAs, you have until Tax Day to fund your account for the tax year.

• Deadline to fund your IRA for 2023: April 15, 2024

• Deadline to fund your IRA for 2024: April 15, 2025

Note that filing for a tax extension doesn’t buy you extra time to fund your IRA for the year.

What about RMDs in 2024?

Some retirement accounts are subject to required minimum distributions (RMDs), which are mandatory distributions once the account holder reaches a specified age. There are no RMDs for Roth IRAs, but RMDs are required for traditional IRAs.

The Secure Act 2.0, which was passed in late 2022, raised the RMD age from 72 to 73. Here’s when you’ll need to take RMDs under the new law:

If you turned 73 in 2023, the old rules apply:

• Your first RMD was due on April 1, 2023.

• Your second RMD is due by Dec. 31, 2023.

If you turn 73 in 2024, the new rules apply:

• You don’t need to take an RMD in 2024.

• Your first RMD is due by April 1, 2025.

Because the rules surrounding RMDs are complex, always consult with a tax adviser.

FAQs

What is the Roth IRA limit for 2024?

The Roth IRA contribution limit is $7,000 in 2024, or $8,000 if you’re at least 50. These limits are $500 higher than the 2023 limits of $6,500, or $7,500 for taxpayers 50 and older.

Do the limits apply to IRA rollovers?

No. If you’re rolling over a 401(k) or another retirement account into an IRA, the rolled over amount won’t count toward the limits. You can roll over your account and then fund your IRA up to the limits for the tax year.

Can I contribute to a Roth IRA if I earn more than the income limit?

Some retirement savers who earn more than the Roth IRA limits use a strategy called a backdoor Roth IRA. In short, you fund a non-deductible traditional IRA with after-tax contributions, then transfer the funds to a Roth IRA and pay any applicable taxes. The advantage of this strategy is that you get the long-term, tax-free growth a Roth IRA offers. Be aware, though, that the IRS has never provided formal guidance on whether this strategy is permitted, so there’s some risk involved.