This month, the IRS announced the 2024 income limits for Roth IRAs (individual retirement accounts). And if you haven't seen them yet, you'll be happy to know that they are better than ever. So if your income blocked you from making direct contributions to a Roth IRA in the past, the new limits may make it easier to qualify.
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Roth IRA income limits for 2023 and 2024
Roth IRAs are loaded with tax-free benefits you can enjoy now and later on in life. But there's a catch: Your income must fall under the annual income threshold to make direct contributions to the account right now.
The good news is that the Roth IRA income ranges will go up in 2024. Let's say your tax-filing status is head of household. The income limit to contribute the full amount to a Roth IRA in 2024 is $146,000, up from $138,000 in 2023. After your income surpasses that, you'll enter the phase-out range, and your contribution limit will be reduced. You're barred from making direct contributions to a Roth IRA when your income jumps over $161,000 as a single tax filer or $240,000 as a joint tax filer in 2024.
The key income number you'll need to watch out for is your modified adjusted gross income (MAGI). It's basically your adjusted gross income with a few potential tweaks. Once you find that number, you can determine the fate of your Roth IRA contribution potential.
Check out the Roth IRA contribution limits for 2023 and 2024 below to see if you have a chance to take advantage of the Roth IRA.
|
2023 Tax-Filing Status |
Income Limit For a Full Roth IRA Contribution |
Roth Contribution Phases Out Entirely For Income Above |
|---|---|---|
|
Single and head of household | $138,000 | $153,000 |
|
Married filing jointly | $218,000 | $228,000 |
Data source: IRS.
|
2024 Tax-Filing Status |
Income Limit For a Full Roth IRA Contribution |
Roth Contribution Phases Out Entirely For Income Above |
|---|---|---|
|
Single and head of household |
$146,000 |
$161,000 |
|
Married filing jointly |
$230,000 |
$240,000 |
Data source: IRS.
How much can you contribute to a Roth IRA in 2024?
After you've checked the box on the income requirements, it's time to think about your Roth IRA contribution potential.
For 2024, the IRS is kicking it up, letting retirement savers 49 and under stash away up to $7,000 in a Roth IRA. If you are 50 and older, you can add an extra $1,000 to your retirement pot. This catch-up contribution remains unchanged from 2023, so you can add $8,000 to a Roth IRA in 2024 if you meet the age and income requirements.
To be clear, you're not able to contribute more than you have earned for the year. So if you are 75 years old and earn $5,000 in 2024, you won't be able to contribute the maximum amount to your Roth IRA. Your annual Roth IRA contribution is limited to your taxable compensation, which is $5,000.
Keep tabs on your income in 2024
Now is a good time to estimate your potential earnings for 2024. If you think you'll be under the income limit, you can get started with your Roth IRA contributions on Jan. 1, 2024. But if your income is wildly unpredictable, and you're closer to the phase-out range, you may want to wait a little longer before you dump money into the account.
You don't need to know all the answers and make a move right now. However, by thinking about your game plan in advance, you'll be able to lay out your options and put yourself in the best position to reach your goals in 2024.
