Broker Check

Is Retirement Achievable? – and other “IRAs” . . .

| December 18, 2023

While the question above isn’t what the acronym “IRA” stands for, it may represent an underlying uncertainty that comes to mind when you hear the term.

Individual Retirement Accounts (IRAs) are tremendous vehicles for preparing for your long-term future. In fact, they’re so great that the IRS has placed limits on the extent to which they can be used. These limits are often unfamiliar and can change year to year, potentially adding another question mark to your retirement preparation.

We like bringing clarity to the retirement picture, so we’re glad to provide this quick reference guide to contribution limits and other important IRA information.

 

Basic Retirement Account Contribution Limits

The amount you can contribute to your retirement account depends on the type of your retirement account, your age, and your taxable compensation. Below are the maximum annual contribution amounts for various IRAs and other retirement accounts.

Type of Account

2023

2024

Traditional/Roth IRA

$6,500 ($7,500 if you’re age 50 or older) or, if less, your taxable compensation for the year 2023

$7,000 ($8,000 if you’re age 50 or older) or, if less, your taxable compensation for the year 2024

Simple IRA

$15,500 ($19,000 if you’re age 50 or older) or, if less, your taxable compensation for the year 2023           

$16,000 ($19,500 if you’re age 50 or older) or, if less, your taxable compensation for the year 2024

SEP IRA

$66,000 or, if less, 25% of self-employed taxable compensation for the year 2023

$69,000 or, if less, 25% of self-employed taxable compensation for the year 2024

401(k)/403(b)/TSP/most 457 plans

$22,500 ($30,000 if you’re age 50 or older) or, if less, your taxable compensation for the year 2023

$23,000 ($30,500 if you’re age 50 or older) or, if less, your taxable compensation for the year 2024

 

Income Limits for Roth IRA Contributions

Unlike Traditional IRA contributions, Roth IRA contributions are limited if your income exceeds a certain amount. Additionally, Roth IRA contributions are not deductible on your tax return. Depending on your income, you may be able to make a full contribution, a partial contribution, or no contribution. Below are the modified adjusted gross income (AGI) limits.

Tax Filing Status

2023

2024

Married Filing Jointly or Qualifying Widow(er)

1.< $218,000, you can make a full contribution

2.>= $218,000 but < $228,000, you can make a partial contribution

3.>= $228,000, you cannot make a contribution

1.< $230,000, you can make a full contribution

2.>= $230,000 but < $240,000, you can make a partial contribution

3.>= $240,000, you cannot make a contribution

Single or Head of Household

1.< $138,000, you can make a full contribution

2.>= $138,000 but < $153,000, you can make a partial contribution

3.>= $153,000, you cannot make a contribution

1.< $146,000, you can make a full contribution

2.>= $146,000 but < $161,000, you can make a partial contribution

3.>= $161,000, you cannot make a contribution

 

Tax Deductibility and Phaseout of Traditional IRA Contributions

You may be able to deduct all or part of your Traditional IRA contributions on your tax return depending on your income and whether you (and your spouse if married) are covered by a retirement plan at your work.

Below are the phaseout ranges for Married Filing Jointly and Single tax filing statuses if either you (or your spouse if married), are covered by a retirement plan at work.*

AGI Phaseout begins - partial deduction if modified AGI exceeds:

Tax Filing Status

2023

2024

Married Filing Jointly

$116,000 ($218,000 if you are not covered by a retirement plan at work but your spouse is)

$123,000 ($230,000 if you are not covered by a retirement plan at work but your spouse is)

Single

$73,000

$77,000

 

AGI Fully Phased Out - no deduction if modified AGI exceeds:

Tax Filing Status

2023

2024

Married Filing Jointly

$136,000 ($228,000 if you are not covered by a retirement plan at work but your spouse is)

$143,000 ($240,000 if you are not covered by a retirement plan at work but your spouse is)

Single

$83,000

$87,000

*See IRS Publication 590-A for phaseout ranges for Married Filing Separately, Head of Household, or Qualifying Widow(er) filing statuses.

If neither you nor your spouse (if married) are covered by a retirement plan at your work, there is no AGI limit and you can deduct all of your Traditional IRA contribution.