IRA Contribution Limits

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Contributor, Benzinga
November 20, 2023

As it does every year, the IRS recently announced contribution and deduction limits to Americans’ retirement accounts for 2024. Individual retirement accounts (IRAs) offer tax-advantaged savings opportunities. The IRA limits for Roth and traditional IRAs are up by $500 for 2024. It's important to review how to maximize your retirement savings best and take advantage of the significant tax benefits.

IRAs differ from 401(k) plans in a number of ways, but the most significant difference is the contribution limits. While 401(k) participants can contribute a healthy $22,500 annually as of 2023, IRA holders face much lower limits. What determines how much you can contribute? Your age, marital status and modified adjusted gross income (MAGI) will tell the tale. Read on to understand IRA contribution limits for 2023 and 2024.

Understanding IRA Contribution Limits

Not everyone is allowed to contribute the same amount to their IRA. In fact, much high income earned isn’t eligible to contribute to a Roth IRA at all. But no income limits exist for traditional IRAs, only deduction restrictions. 

Regardless of your status, contributions are limited compared to retirement vehicles like the 401(k). IRA contribution rates for 2023 are:

  • $6,500 maximum contribution if you’re younger than 50
  • $7,500 maximum contribution if you’re 50 or older

For 2024, those IRA limits increase to:

  • $7,000 maximum contribution if you’re younger than 50
  • $8,000 maximum contribution if you’re 50 or older

In addition to standard IRA contribution amounts, participants older than 50 can make catch-up contributions because mandatory distributions begin at age 70 ½. 

Remember, contributions can be made to a traditional IRA regardless of your income level. An employee making $30,000 can only contribute $6,500 in 2023, the same as an employee at the same company making $200,000. But here’s the kicker — IRA contributions are tax-deductible depending on your salary and whether you already participate in a 401(k) or other qualified retirement accounts.

Important note: If neither you nor your spouse have a work-sponsored plan like a 401(k) and only contribute to a traditional IRA, your contribution will be completely tax-deductible regardless of your income. If a work plan covers you or your spouse, your modified AGI will determine the amount you can deduct.

StatusModified AGITax Deduction Eligibility
SingleAny amountCan make full deduction up to contribution limit
Married filing jointly with a spouse not covered by a work planAny amountCan make full deduction up to contribution limit
Married filing jointly with a spouse covered by a work plan$218,000 or lessCan make full deduction
Married filing jointly with a spouse covered by a work planBetween $218,000 and $228,000Can make partial deduction
Married filing jointly with a spouse covered by a work planOver $228,000 Ineligible for deduction
Married filing separately with spouse covered by a work planLess than $10,000Can make partial deduction
Married filing separately with spouse covered by a work planOver $10,000Ineligible for deduction

IRA Contribution Limit Exceptions

As always, exceptions to the rules apply. Make sure to understand these exceptions before filing your tax return:

  • Earned income rules: Only earned income counts toward IRA contributions. Earned income means taxable compensation like wages, commissions, bonuses and self-employed income. Income from rental properties, stock sales, pensions and annuities does not apply.
  • Must earn income above contribution level: The $6,500 maximum contribution only applies if you earned at least $6,500 in taxable compensation during the year. If you made less than $6,500 in the calendar year, you can only contribute up to that earned income. For example, a part-time worker earning $4,500 annually can only contribute up to $4,500 in a traditional IRA. You must make at least $6,500 to make the full contribution.

Spousal IRAs: If you’re married and file jointly, you can still contribute to an IRA even if you have no earned income. Married nonworking individuals can use their spouse’s income to meet the taxable compensation rules and open a traditional IRA. If your spouse makes at least $13,000 annually, you could contribute $6,500 to an IRA.

Best Retirement Advisers and Accounts

Should You Contribute to a Roth IRA or Traditional IRA?

The Roth IRA has a number of advantages over the traditional IRA, especially if you’re already contributing to a 401(k). Tax deferments are the biggest difference — Roth IRA taxes are paid upfront while traditional IRAs are taxed at withdrawal. 

If you’re already contributing to a 401(k), your tax deductions on a traditional IRA will be limited based on your income. Plus, you’ll be getting no tax diversification. Roth IRAs also have no mandatory distribution age and much more lenient rules on early withdrawals. Consider the following if you’re debating Roth IRA versus traditional IRA:

  • You should open a traditional IRA if:
    • You have no 401(k) from work
    • You expect to be in a lower tax bracket at retirement
    • You have no plans to tap it before age 59 ½ 
    • Your modified AGI is more than $153,000 annually or more than $228,000 if married and filing jointly
  • You should open a Roth IRA if:
    • You already have a 401(k)
    • You expect to be in the same tax bracket at retirement
    • You want flexibility on distributions
    • Your modified AGI is less than $153,000 annually or less than $228,000 if married and filing jointly.  

What if You Want to Contribute Past the Limit?

Contributing more than $6,500 to a traditional IRA might leave you susceptible to stiff penalties that eradicate your benefits. Any extra contributions and their earnings will be hit with a 6% tax each year. If you notice you’ve contributed too much and have already filed your taxes, you can still amend your return by Oct. 15 — just make sure to take out excess cash first.

You're out of luck if you want to contribute more than $6,500 to a traditional IRA, but you can still stash more money away with different retirement vehicles.

Account Type2023 Contribution Limit
401(k), profit-sharing and 403(b) employer-sponsored plans$22,500 ($30,000 if over age 50)
Simplified Employee Pension (SEP) IRA25% of compensation or $66,000 
Savings Incentive Match Plan for Employees (SIMPLE) IRA$15,500 ($19,000 if over age 50)

You still have options if you don’t qualify for anything beyond the traditional or Roth IRA. Health savings accounts (HSAs) are tax-deferred savings vehicles for people and families who meet minimum insurance deductibles. HSA funds can only be used for qualified medical expenses until age 65, but no restrictions apply afterward. 

529 Plans are tax-deferred savings vehicles for qualified education expenses. If you’re a parent and plan on sending kids to college someday, a 529 plan is a great way to get additional tax benefits on investment savings.

And don’t forget, a good old standard brokerage account is still better than a bank account or certificate of deposit (CD). 

How to Find an IRA that Works for You

Finding the proper IRA takes a little self-evaluation. You don’t necessarily need the help of a certified financial planner, but you’ll need to consider your financial situation both now and in the future. How much do you want to save? What other investment vehicles do you contribute to? If you already have a 401(k) from work and don’t make enough to disqualify you from a Roth IRA, open a Roth. You’ll get better tax treatment and fewer restrictions. 

If you don’t have a work-sponsored plan, a traditional IRA is your top option for building retirement savings. Most brokerages offer IRAs with no fees or a minimum deposit to open. Roth IRA versus traditional IRA isn’t the important debate here. If you contribute early and often to either plan, you’ll be financially well ahead of your peers and can plan a comfortable retirement for yourself and your loved ones.

Frequently Asked Questions


How much can I contribute to an IRA if I also have a 401(k)?


The maximum you can contribute to an IRA if you also have a 401(k) depends on whether you’re single or married and filing single or jointly. If you’re single, you can get a full deduction on IRA contributions up to the IRA limit on contributions. You can take the full deduction for married couples filing jointly if your annual gross income is $218,000 or less.


What is the maximum you can contribute to an IRA annually?


The maximum you can contribute to an IRA for 2023 is $6,500. For 2024, that limit increases to $7,000.


Is there an income limit for contributing to a traditional IRA?


There is no income limit to contribute to a traditional IRA. The maximum contribution is $6,500 for tax year 2023 and $7,000 for 2024.

About Alison Plaut

Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.