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Understanding the contribution limits and income phase-outs for Individual Retirement Accounts (IRAs) is essential for planning your retirement savings. These rules determine how much you can contribute and whether you qualify for tax benefits based on your income level.
IRA Contribution Limits
The IRS sets annual contribution limits for IRAs. For 2024, the maximum contribution is $6,500 for individuals under age 50. Those aged 50 and above can contribute an additional $1,000 as a catch-up contribution, totaling $7,500.
Income Phase-Out Ranges
Income limits affect your ability to deduct traditional IRA contributions or contribute to a Roth IRA. These limits vary depending on your filing status and whether you or your spouse are covered by a retirement plan at work.
Traditional IRA Deduction Phase-Out
If you or your spouse are covered by a workplace retirement plan, your deduction for traditional IRA contributions phases out at certain income levels. For 2024, the phase-out range for single filers is $73,000 to $83,000. For married couples filing jointly, it is $116,000 to $136,000.
Roth IRA Income Limits
Contributions to a Roth IRA are limited based on income. For 2024, the ability to contribute begins to phase out at a modified adjusted gross income (MAGI) of $138,000 for single filers and $218,000 for married filing jointly. Contributions are completely phased out at MAGI of $153,000 and $228,000, respectively.
Summary
- Maximum IRA contribution for 2024 is $6,500, with a $1,000 catch-up for those 50+.
- Income limits determine eligibility for tax deductions and Roth contributions.
- Phase-out ranges vary based on filing status and coverage by employer retirement plans.