For 2024, the Individual Retirement Arrangement (IRA) contribution limit is $7,000. This limit applies to the total amount you can contribute across all of your traditional and Roth IRAs each year.
Understanding the 2024 IRA Contribution Limits
The Internal Revenue Service (IRS) sets annual limits on how much individuals can contribute to their IRAs. These limits are designed to encourage retirement savings while also providing a framework for tax benefits.
Key Contribution Amounts for 2024
The maximum amount you can contribute to your IRAs in 2024 depends on your age:
| Age Group | 2024 IRA Contribution Limit |
|---|---|
| Under 50 | $7,000 |
| 50 and Older | $8,000 |
This includes a special provision for those aged 50 and over.
The "Catch-Up" Contribution Explained
If you are age 50 or older by the end of the calendar year, you are eligible to make an additional "catch-up" contribution. For 2024, this catch-up amount is $1,000, bringing your total possible contribution to $8,000. This provision is designed to help older workers boost their retirement savings as they approach their retirement years.
The Taxable Compensation Rule
It's important to note that while the stated limits are $7,000 or $8,000, your total contributions cannot exceed your taxable compensation for the year. Taxable compensation generally refers to wages, salaries, and net earnings from self-employment. For instance, if you are under 50 and earned only $5,000 in taxable compensation for the year, your maximum IRA contribution would be $5,000, even though the general limit is $7,000.
Practical Insights for Your IRA Contributions
- Combined Limit: The stated limits apply to the total contributions made to all of your traditional and Roth IRAs. You cannot contribute $7,000 to a Traditional IRA and another $7,000 to a Roth IRA in the same year; the combined total for both is $7,000 (or $8,000 if age 50 or older).
- Retirement Savings: Contributing to an IRA is a powerful way to save for retirement, offering potential tax advantages depending on the type of IRA you choose. Traditional IRA contributions may be tax-deductible, while qualified withdrawals from Roth IRAs in retirement are typically tax-free.
- Stay Informed: Retirement contribution limits can change annually due to inflation adjustments. It's always a good practice to consult official resources, such as the Internal Revenue Service (IRS) website, for the most current information. You can find more details regarding these limits on the IRS Retirement Topics - IRA Contribution Limits page.
