2024 Roth IRA Income Limits: What You Need to Know

If you’re looking to contribute to a Roth IRA, you might be wondering if you’re eligible based on your income level.

The good news is that there are limits in place to ensure that everyone has a fair chance to save for retirement. But what are these limits, and how do they affect your ability to contribute to a Roth IRA?

Contribution Limits

The first limit on a Roth IRA is the amount you’re allowed to put in. If you’re eligible to contribute, which means you have earned income and you are under the income limits we’re about to talk about, you can put away $7,000 into your Roth IRA.

This is per person per year, so if you’re married and you both have a Roth, you can do $14,000 between the two of you.

If you’re under the age of 50, you’re also allowed to make a catch-up contribution, which is an additional $1,000 per person for the year.

So in that case, over the age of 50, the individual limit is $8,000.

Income Limits

Now, let’s talk about the income limits. This is something that’s called the Roth IRA income phase-out. Basically, up to a certain point, you can contribute the full amounts we just talked about.

Once you pass that lower limit, how much you contribute can start to go down. So the amount that you’re allowed to put in will go down until you hit the upper limit.

Once you hit the upper limit, you can contribute nothing, zero, not a zilch to a Roth IRA.

Single Filer Income Limits

If you are a single filer in 2024, the lower threshold starts at $146,000 of modified adjusted gross income.

That means once you get north of 146,000, your contribution limit starts to drop until you hit $161,000. At that point, no contribution for you.

If you’re married, filing joint, which is the way most married couples file, the lower limit is $230,000. Modified adjusted gross income.

Meaning if the combined income is below that, you can both make full contributions. The amount you can put in drops until you get to $240,000. At which point, no contribution for you.

Filing Separate Returns

Now here’s something to watch out for. If you are married but you file separate returns, married, filing separate, you’re basically screwed because even if you have $10,000 in income, your contribution amount is zero.

This is because the IRS doesn’t want people skirting the tax rules and filing separately to show lower income levels and then be able to take advantage of Roths.

Why the Limits?

Why are these limits in place?

My personal guess is this, Roth money is some of the most powerful money in our financial system. Once the money gets into the Roth, not only is that money tax free, but all the future earnings from that money are also tax free.

That’s why we have contribution limits in the first place because they want you to save money and put away money, but they wanna be able to tax those dollars, those gains.

And so if there were no limits on this sort of thing, people would just sock every last dollar they had away into a Roth IRA and then they’d cut out the IRS from tons of future tax revenue.

Strategies for Getting Money into a Roth

The first one, are you covered by a retirement plan at work like a 401k or a 403b?

Most of them offer a Roth option these days, meaning you can elect to have your contributions go in post-tax, grow tax-deferred, and be tax-free in the future Roth, but inside of your 401k or your 403b.

These plans have no income limits. You can put away whatever money you want regardless of how much you make.