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IRA Contribution Limits for 2024 vs. 2023

Here’s how much you can save for retirement in traditional IRAs and Roth IRAs

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Individual retirement accounts (IRAs) are one of the most popular tools for building retirement savings. About 42 percent of U.S. households have an IRA, according to the Investment Company Institute. 

But each year, the IRS adjusts the rules for IRA eligibility based on inflation. In 2024, those adjustments will make a big difference in who can contribute to a Roth IRA, and who can deduct contributions to a traditional IRA from their taxable income.

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For both traditional and Roth IRAs, you can contribute up to $7,000 for 2024, up from $6,500 in 2023. Retirement savers age 50 and older can chip in an extra $1,000 a year as a catch-up contribution, so $8,000 in all. A person who turns 50 this year and starts contributing can sock away $128,000 in an IRA by age 65, not including any investment returns on the principal or contribution increases; a couple could save $256,000.

Starting with the 2024 tax year, the catch-up cap will be indexed to inflation, meaning people 50-plus can save more as the cost of living goes up. Sadly, the rules for adjusting those caps kept the catch-up amount to $1,000 next year. From 2025 on, IRA owners ages 60 to 63 will be able to make larger catch-up contributions: up to $10,000 or 50 percent more than the age-50 maximum, whichever amount is larger. Both provisions are part of the SECURE 2.0 Act, a set of measures designed to promote retirement saving that Congress passed in late 2022.

Traditional IRAs

traditional IRA allows you to deduct your contribution from your income, which can reduce your taxes and make it easier on your budget to save. 

For example, suppose you’re in the 24 percent federal income tax bracket. To save $7,500 for retirement in a fully taxable account, you would have to earn about $9,868 before taxes. 

With a traditional IRA, however, you can deduct that $7,500 contribution, meaning that to get $7,500 to invest, you only have to earn $7,500. (You can only contribute earned income to an IRA; investment income and Social Security benefits don’t count.)

If you (or your spouse) don’t have a retirement plan of any kind, you can take the full deduction for an IRA. If you do have a retirement plan available from your employer — even if you don’t take advantage of it — your ability to deduct a traditional IRA contribution is limited by your income.

You can’t avoid paying taxes on your traditional IRA contributions, as well as any investment gains, forever. When you start taking withdrawals after age 59½, they are taxed as income at your regular tax rate. (If you take money out before age 59½, it is considered an early withdrawal and in most cases you’ll pay an additional 10 percent tax penalty.)

For example, if you are in the 24 percent tax bracket and you take out $7,500, you’ll get $5,700 after federal income taxes. 

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If you are younger than 59½, you’ll owe another $750 to the IRS.

Starting at age 73, you must take a minimum amount annually from a traditional IRA. This required minimum distribution (RMD) is calculated by the IRS based on your account balance and life expectancy and it, too, is taxable.

Roth IRAs

Contributions to a Roth IRA aren’t deductible, but you pay no taxes when you withdraw your contributions at any age because the money is taxed before it goes into the account. And if you make a qualified withdrawal after you hit age 59½, you pay no taxes on your investment earnings, provided the Roth account is at least five years old. There are no RMDs for Roth IRAs.

There’s one catch: Your ability to make contributions to a Roth IRA is limited by your federal income tax filing status and your modified adjusted gross income (MAGI), which is your adjusted gross income on your 1040 or 1040-SR tax form minus certain deductions, such as student loan interest.

The table below shows the income limits for 2023 and 2024 for making Roth contributions. As with traditional IRA contribution limits, the Roth income limits are adjusted for inflation each year.

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