In this article, we’ll explore the 2023 and 2024 maximum IRA contribution limits and phaseouts to guide workers in their 20s to 60s who are concerned with their retirement savings plans.
Understanding Maximum IRA Contribution Limits
The Internal Revenue Service (IRS) sets the annual maximum contribution limit for Individual Retirement Accounts (IRAs). This includes both Traditional IRAs and Roth IRAs, where the combined total applies to all your accounts of each type.
The IRS determines yearly increases by reviewing the consumer price index (CPI). Let’s look at how these limits have changed in recent years:
- 2019 – $6,000 standard limit
- 2020 and 2021 – $6,000 standard limit
- 2022 – $6,000 standard limit
- 2023 – $6,500 standard limit ($500 increase)
- 2024 – $7,000 standard limit ($500 increase)
IRA Catch-up Contributions for Ages 50 and Over
For those aged 50 or over, the IRS allows additional contributions to help you catch up on your retirement savings. These are referred to as catch-up contributions:
- 2023 – $1,000 catch-up contribution (same as the prior year)
- 2024 – $1,000 catch-up contribution (same as the prior year)
With these catch-up contributions, you can add to your IRA limits and potentially maximize your retirement savings.
Income Limits for Traditional and Roth IRAs
Income phaseout limits determine how much you can deduct from your taxes in the case of a Traditional IRA or the total contribution amount for a Roth IRA, which is not tax-deductible. These limits are also tied to CPI and have increased for 2023 and 2024:
2023 Income Limits
For Traditional IRAs, phaseouts depend on whether or not you have a retirement plan through your employer:
- If you DO HAVE a retirement plan with your employer:
- Single/Head of Household: $114,000 to $132,000
- Married Filing Jointly: $208,000 to $250,000
- If you DO NOT HAVE a retirement plan through an employer:
- Single/Head of Household: $73,000 to $93,000
- Married Filing Jointly: $138,000 to $218,000
For Roth IRAs, the phaseout limits are more straightforward:
- Single/Head of Household: $153,000 to $218,000
- Married Filing Jointly: $236,000 to $372,000
2024 Income Limits
Similar to 2023, income limits for 2024 will follow the CPI increase trends:
For Traditional IRAs:
- If you DO HAVE a retirement plan with your employer:
- Single/Head of Household: $119,000 to $138,000 (projected)
- Married Filing Jointly: $214,000 to $257,000 (projected)
- If you DO NOT HAVE a retirement plan through an employer:
- Single/Head of Household: $76,000 to $98,000 (projected)
- Married Filing Jointly: $142,000 to $230,000 (projected)
For Roth IRAs:
- Single/Head of Household: $155,000 to $228,000 (projected)
- Married Filing Jointly: $247,000 to $369,000 (projected)
Tips for Maximizing IRA Contributions
To make the most of your IRA contributions in the 2023 and 2024 calendar years, consider the following tips:
- Evaluate whether you’ll contribute to an IRA each year and how much you plan to allocate between Traditional and Roth IRAs.
- Keep track of income changes that may affect your phaseout limits.
- Consider making IRA contributions earlier in the calendar year to maximize time for compounding interest and capital gains.
- If eligible, consider making catch-up contributions if you’re aged 50 or older.
- Consult a financial advisor to determine the best approach for your specific situation.
We hope this guide helps you navigate the world of IRA contributions in 2023 and 2024 as you work towards a secure retirement.
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