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Income limits can affect your ability to contribute to a traditional IRA. Understanding these limits helps you plan your retirement savings effectively.
What Are Income Limits?
Income limits are thresholds set by the IRS that determine whether you can deduct your traditional IRA contributions on your taxes. These limits vary based on your filing status and whether you or your spouse are covered by a retirement plan at work.
How Income Limits Affect Contributions
If your income exceeds certain levels, your ability to deduct contributions may be reduced or eliminated. However, you can still contribute to a traditional IRA, but the deduction might not be available. This can influence your overall tax strategy and retirement planning.
Income Limits for 2024
For the tax year 2024, the income limits are as follows:
- Single filers covered by a workplace retirement plan: deduction phases out between $73,000 and $83,000.
- Married filing jointly, both covered: phase-out between $116,000 and $136,000.
- Married filing jointly, one covered: phase-out between $218,000 and $228,000.