If you plan to tuck away money in a Roth IRA (individual retirement account) next year, you'll be glad to know that the contribution limits are going up. Now is a good time to plan ahead so you don't miss out on this opportunity to boost your retirement savings.
Roth IRA contribution limits increase in 2024
Roth IRAs are widely known for their tax benefits during retirement. If you qualify, you can load your account with after tax dollars now. In return, you'll be able to collect your money tax-free during retirement, which is a huge plus when you're living on a fixed income. The less money you have to give up for taxes, the more money you can use to fund your lifestyle.
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In order to reap the full benefits of the Roth IRA and set yourself up for a comfortable retirement, you'll have to maximize your contribution power every year to boost your portfolio. Right now, you can contribute $6,500 to your Roth IRA if you're under 50. That number goes up to $7,500 if you are older. You have until April 15, 2024 to fund your Roth IRA for 2023, so there's still time to make moves for the current year.
But for 2024, the IRS is taking the limits up a notch, allowing qualified retirement savers under 50 to tuck away up to $7,000 in a Roth IRA. After you turn 50, the deal gets sweeter -- you can contribute an extra $1,000. This catch-up contribution remains unchanged from 2023, so you can contribute up to $8,000 to a Roth IRA in 2024 if you're 50 or older.
|
Age |
2024 Roth IRA Contribution Limits |
2023 Roth IRA Contribution Limits |
|---|---|---|
|
Under 50 |
$7,000 |
$6,500 |
|
50 or over |
$8,000 |
$7,500 |
Data source: IRS. Chart by author.
Map out your contribution game plan
Although the contribution limits are going up next year, you're not required to add more money to your Roth IRA. It's completely up to you.
You can contribute any amount that makes sense for your financial situation -- which can be $50 or $5,000 for the year -- if you meet the income requirements. But if you're able to contribute more money, you'll have more funds to invest in your favorite assets and grow your portfolio.
Here are three questions you can ask yourself right now to help you create your Roth IRA contribution plan for 2024:
- How much do you want to contribute to a Roth IRA?
- Are you allowed to contribute the maximum amount?
- Do you want to set up recurring transfers from a checking account to a Roth IRA to achieve your goal?
Let's say you're 45 years old and qualify to contribute $7,000 to your Roth IRA in 2024. You can contribute around $583 to your Roth IRA every month for 12 months to reach your goal.
But if you need to beef up your emergency fund first, you can focus on your savings goals during the first quarter of the year and then work on your Roth IRA goals afterwards. You have until April 15, 2025 to contribute money toward a 2024 Roth IRA, so there's no pressure to get all the funds in your account by December 31.
Make it easy to contribute money to your retirement account by developing a consistent plan of action. You can contribute to your Roth IRA weekly, monthly, or on another schedule, depending on the frequency of your income. Put your contributions on autopilot so you don't have to think about it.
Don't miss out on the rise in contribution limits
If you've been trying to boost your retirement balance, you can make it happen in 2024. Next year's Roth IRA contribution limits are bigger than ever. Create your contribution game plan now and you'll be on your way to maxing out your Roth IRA.
