As the new year begins, assessing your retirement savings strategies is an opportune time. One common question is whether it’s too late to contribute to your Individual Retirement Account (IRA) for the 2024 tax year. The good news is that you still have time.
IRA Contribution Deadlines
For the 2024 tax year, you can contribute to your IRA until the federal tax filing deadline, which is April 15, 2025. This means you have until that date to contribute to either a Traditional or Roth IRA for 2024. Contributing earlier can provide more time for your investments to grow tax-deferred or tax-free, depending on the type of IRA.
Contribution Limits for 2024
The contribution limits for IRAs in 2024 are as follows:
- Under Age 50: You can contribute up to $7,000.
- Age 50 and Over: You can contribute up to $8,000, which includes a $1,000 catch-up contribution.
Income Limits and Eligibility
While anyone with earned income can contribute to a Traditional IRA, the deductibility of those contributions may be affected by your income and whether a retirement plan at work covers you. For Roth IRAs, income limits determine eligibility to contribute:
- Single Filers: Full contributions are allowed if your modified adjusted gross income (MAGI) is less than $161,000. The contribution limit phases out between $161,000 and $171,000.
- Married Filing Jointly: Full contributions are permitted if MAGI is less than $240,000, with the limit phasing out between $240,000 and $250,000.
Benefits of Early Contributions
Contributing to your IRA early in the year can maximize the benefits of compound interest, allowing your investments more time to grow. Even though you have until April 15, 2025, to make contributions for 2024, starting sooner can enhance your retirement savings.
Next Steps
To make a contribution, ensure you have earned income for 2024 and that your contributions do not exceed the annual limits. Consult with a financial advisor or tax professional to understand how IRA contributions fit into your overall retirement strategy and to ensure compliance with IRS rules.
If you’re ready to maximize your retirement savings and make the most of your IRA contributions for 2024, Gemini Accounting Services LLC is here to help. Our experienced professionals can guide you through the process, ensuring compliance with IRS rules while optimizing your tax benefits.