Roth IRAs: Income, contribution, and age limits

Roth IRA eligibility and income limits

The first thing you must understand about Roth IRAs is that not everyone can participate. Your eligibility to contribute to a Roth IRA is determined by the IRS and based on your modified adjusted gross income (MAGI). There’s quite a bit that goes into that calculation, so it’s best to work with a financial professional or tax advisor to see if you qualify. In order for you to contribute to a Roth IRA, your MAGI must be under:

For 2024: $161,000 if filing single; $240,000 if married filing jointly

If you exceed this income, you are not allowed to contribute to a Roth IRA. However, you can still contribute to a traditional IRA and have other options to save:

Backdoor Roth IRAs

If the tax advantages and lack of required minimum distributions (RMDs) of a Roth IRA are important to your retirement strategy and you exceed the income requirements, there is a way around it. It’s called a backdoor Roth IRA, and it’s completely legal as long as you follow the rules set out by the IRS. Read more about backdoor Roth IRAs.

Other retirement planning options

In addition to Roth IRAs and workplace savings accounts like 401(k)s, there are plenty of ways to help you work toward the retirement you deserve. These tools can be used separately or together to ensure you have everything you need, when you need it most:

Deferred annuities can provide a guaranteed stream of income for life on a flexible schedule for reasonable monthly premiums. Learn about how annuities are different from IRAs.¹

Cash value life insurance not only provides death benefit if something were to happen to you but also accumulates a pool of money (called cash value) over time that you can access² should you need it.

Traditional IRAs are similar to Roth IRAs with a few key differences. Anyone can participate and contributions are tax free, but withdrawals are taxed as income.

Roth IRA contribution limits for 2024

If you already have a Roth IRA or want to set one up, here is how much you can put into an IRA for the years listed:

Contribution limits for traditional and Roth IRAs are combined

Keep in mind that if you have both a traditional IRA and a Roth IRA, the contribution limit for both combined is $7,000 in 2024. Exceeding the IRA contribution limit can incur stiff penalties (see next section).

Excess Roth IRA contributions

If you exceed your yearly contribution limit, you will pay a 6% penalty each year on any excess contributions that remain in your account. That’s enough to counteract most of the investment gains in good years and could mean your investment loses money. Be careful not to contribute too much, paying particularly close attention if you are in the reduced contribution income area.

The good news is that you can avoid the penalty by withdrawing excess contributions and filing an amended tax return. Your other option is to correct the mistake in the following year by reducing your contributions by the amount you exceeded in the previous year.

Are Roth IRA contributions tax deductible?

No. Traditional IRA contributions are tax deductible, but Roth IRA contributions are not. This is the main difference between the two. The benefit of a Roth IRA is that, since you’ve already paid taxes on the money going in, when you start taking withdrawals in retirement, they are tax free.³

Roth IRA age requirements

There are no restrictions on age for contributing to a Roth IRA. As long as you have some income and do not exceed the MAGI limits, you can contribute whether you are 16 or 86.

Roth IRAs also have no required minimum distributions (RMDs). With a traditional IRA, you must begin making withdrawals at age 73 (as of 2023), but that doesn’t apply to Roth IRAs. That means you can continue to contribute to and let your investments grow as long as you are able.

Set up a Roth IRA

Roth IRAs can be an important part of taking advantage of retirement tax strategies. You can open the account at many banks, credit unions, or online brokers, fund your account, and select your investments. Setting up a Roth IRA is fairly easy, but using it to its fullest potential requires careful planning. You don’t have to do this alone. A trusted financial advisor can help you create a holistic approach to retirement and estate planning that gets you where you want to be. 

Roth IRA limit FAQs

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This article is for your general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.

¹Investments in a tax-qualified retirement plan already enjoy tax deferral; therefore, an annuity does not provide any additional tax deferral benefits.

²Accessing cash value reduces death benefit and available cash surrender value.

³Contributions to a Roth IRA may generally be withdrawn at any time without tax consequences. Earnings may generally be withdrawn tax-free if the account is held at least 5 years and withdrawals are made after the account owner reaches age 59 ½. If earnings withdrawals are made before the 5-year period or age 59 ½, income taxes are due, and a 10% federal tax penalty may apply.