For the 2024 tax year, individuals can contribute to both a 401(k) plan and an Individual Retirement Account (IRA), whether traditional or Roth, provided they meet the respective eligibility criteria.
401(k) Contribution Limits for 2024
- Standard Contribution Limit: $23,000
- Catch-Up Contribution (for individuals aged 50 and over): $7,500
- Total Possible Contribution (for those 50 and over): $30,500
These limits apply to both traditional (pre-tax) and Roth (after-tax) 401(k) contributions. Employers may also offer matching contributions, which are not included in the employee’s contribution limits.
IRA Contribution Limits for 2024
- Combined Limit for Traditional and Roth IRAs:
- $7,000 for individuals under age 50
- $8,000 for individuals aged 50 and over
This combined limit applies to the total contributions made to all traditional and Roth IRAs in a given tax year. IRS
Traditional IRA Deductibility
Contributions to a traditional IRA may be tax-deductible, depending on your income and whether you or your spouse are covered by a workplace retirement plan:
- If covered by a workplace retirement plan:
- Single filers: Deduction phases out between $77,000 and $87,000 Modified Adjusted Gross Income (MAGI).
- Married filing jointly: Deduction phases out between $123,000 and $143,000 MAGI.
- If not covered by a workplace retirement plan:
- Full deduction is generally available, regardless of income.
These thresholds are subject to annual adjustments; please refer to the IRS guidelines for the most current information.
Roth IRA Contribution Eligibility
Eligibility to contribute to a Roth IRA is subject to income limits:
- Single filers:
- Full contribution allowed if MAGI is less than $146,000.
- Contribution phases out between $146,000 and $161,000.
- No contribution allowed if MAGI is $161,000 or more.
- Married filing jointly:
- Full contribution allowed if MAGI is less than $230,000.
- Contribution phases out between $230,000 and $240,000.
- No contribution allowed if MAGI is $240,000 or more.
These income limits determine eligibility to contribute directly to a Roth IRA.
Contributing to Both a 401(k) and an IRA
Individuals are permitted to contribute to both a 401(k) plan and an IRA in the same tax year. However, the deductibility of traditional IRA contributions may be affected by participation in a workplace retirement plan and income levels. Roth IRA contributions are also subject to income limitations as outlined above.
Spousal IRA Contributions
For married couples filing jointly, if one spouse has little or no income, the working spouse can contribute to a spousal IRA on behalf of the non-working spouse:
- Combined Contribution Limits:
- $14,000 if both spouses are under age 50.
- $16,000 if both spouses are aged 50 or over.
These contributions are subject to the same income and deductibility rules as individual IRAs.
Additional Considerations
- Backdoor Roth IRA: Individuals whose income exceeds the Roth IRA limits may consider a “backdoor” Roth IRA contribution, which involves making a non-deductible contribution to a traditional IRA and subsequently converting it to a Roth IRA.
- Contribution Deadlines: Contributions to IRAs for the 2024 tax year can be made up until the tax filing deadline in April 2025.
- Tax Filing: It’s advisable to consult IRS Publication 590-A for detailed information on IRA contributions and deductions.
