It's Official -- Here's How Much You Can Save in an IRA in 2024

Individual retirement accounts, or IRAs, are an excellent way to save for retirement. For those who qualify, contributions to a traditional IRA can be completely tax-deductible, and contributions to a Roth IRA can be used to create a tax-free retirement nest egg to use down the road.

Each year, the IRS adjusts the IRA contribution limit to account for inflation, and also makes adjustments to certain income thresholds that determine whether or not you qualify for the tax advantages of IRA investing. The limits for the 2024 tax year were just announced, and here's what you need to know.

The 2024 IRA contribution limit

I won't keep you waiting. In 2024, the IRA contribution limit is rising to $7,000 from its 2023 level of $6,500. There's still a $1,000 catch-up contribution allowed for account owners age 50 and over, which (thanks to recent legislation) could now also be adjusted for inflation in subsequent years.

There are a couple of things to know about this limit. First, to make an IRA contribution, you need to have earned income from a job or a business you actively participate in, and it must be equal to or greater than your IRA contribution. And second, this limit is per person, not per account. In other words, if you have both a traditional and Roth IRA, your combined contributions for 2024 cannot exceed $7,000, or $8,000 if you are 50 or older.

It's also worth noting that the deadline to make your contributions is the tax deadline for the year in question, so you actually have a window of more than 15 months to get your money in. This means that 2023 IRA contributions can be made until the April 2024 tax deadline, and the 2024 contributions discussed here can be made at any point between Jan. 1, 2024 and the April 2025 tax deadline.

Do you qualify for an IRA in 2024?

For starters, everybody with earned income can contribute to a traditional IRA. But in order to take a tax deduction for your contributions -- which is the main reason to use this type of account -- there are income limitations you need to know about.

Specifically, if you're covered by a retirement plan at work, the ability to contribute is restricted by income:

• Single taxpayers who earn more than $87,000 cannot use the traditional IRA deduction if they have a workplace retirement plan (it will say so on your W-2). The ability to use the deduction starts to phase out with income above $77,000.
• Married couples filing jointly who earn more than $143,000 cannot use the deduction if the spouse contributing has a workplace retirement plan. The ability to use the deduction starts to phase out with income above $123,000.

If you are not covered by an employer's retirement plan, there are no income limitations unless you are married and your spouse has a workplace retirement plan. In this case, you can take the full deduction with income up to $240,000 in 2024, with the phase-out of the deduction starting at $230,000.

2024 Roth IRA income limits

If you want to contribute to a Roth IRA, there are income restrictions for everyone, regardless of whether you have access to an employer's retirement plan. Roth contributions are income-restricted by filing status alone:

• Single and head of household filers can contribute to Roth IRAs with incomes as high as $146,000, at which point the ability to contribute starts to phase out, and disappears for income levels of $161,000 or higher.
• For married couples filing jointly, the phase-out threshold and contribution limits are $230,000 and $240,000, respectively.
• For married couples filing separately, these limits are $0 and $10,000 -- in other words, people using this filing status can never make a full Roth IRA contribution.

How to get started

If you want to get started with saving and investing for your retirement in an IRA, the good news is that it can be rather easy to do so. If you want to choose your own investments, check out our best IRA brokers list to find the best fit for you. Alternatively, if you'd rather put your retirement investments on auto-pilot, you can check out our top robo-advisors, as many of them offer IRAs that will allocate your money in a customized investment strategy automatically.