Want to max out your retirement accounts this year?
Below is a checklist to help you determine how much you’re allowed to contribute and the deadlines you need to meet in order for the contributions to count towards this year.
ROTH IRA & TRADITIONAL IRA
Total You Can Contribute as an Individual:
- If you are under age 50, the maximum you can contribute is $7,000.
- If you’re 50 or older, you can contribute $8,000 this year ($7,000 plus $1,000 catch up contribution).
Contributions Are Aggregated:
Keep in mind that the IRS combines the total you put into a Roth IRA and Traditional IRA. In other words, you cannot contribute $7,000 into a Roth IRA and another $7,000 into a Traditional IRA. Rather, you are only allowed to contribute $7,000 aggregate to both accounts. Even if you have 5 Roth IRAs, you must aggregate your contributions.
There is no such thing as a joint IRA.
- IRA stands for Individual Retirement Account.
- If you are married, each spouse needs to open his/her own IRA.
Deadline to make your final contributions if you want it to count for this year:
Contributions for a given tax year can be made up to the final tax filing date, including extensions.
The deadline to contribute for the year 2024 is the tax filing deadline in 2025.
In other words, if you plan to submit your 2024 tax filing without an extension, the deadline to contribute is April 15, 2025. If you file an extension, the deadline to contribute is October 15, 2025.
ROTH IRA CONVERSION
INCOME LIMITS:
If you make too much money (i.e. your income surpasses a certain limit set by the IRS), you cannot contribute directly into the Roth IRA.
Contributing directly into the Roth IRA means that you transfer money from your checking, savings, or other source straight into the Roth IRA.
Instead, you will need to process a Roth conversion (also commonly referred to as “back door Roth”).
If your adjusted gross income is higher than the limits below, then you need to do a Roth conversion in order to contribute to your Roth IRA.
- Single: $146,000 to $161,000
- Married Filing Jointly: $230,000 to $240,000
- Married Filing Separately: $0 to $10,000
Steps to Process Roth Conversion:
- Contribute money into a Traditional IRA.
- Convert that money into a Roth IRA.
How these steps are transacted depends on the financial institution where you own the accounts.
10% Penalty if You Don’t Do The Roth Conversion
If you make more than the income limits above and you contribute directly into the Roth IRA instead of doing the Roth conversion, you will be subject to a tax penalty of 10%.
Employer provided retirement plans: 401(k), TSP, and 403(b)
Total You Can Contribute as an Employee:
- If you are under age 50, the maximum you can contribute is $23,000.
- If you’re 50 or older, you can contribute $30,500 this year ($23,000 plus $7,500 catch up contribution).
Total Contribution to Your Account (includes employee and employer contributions):
- If you are under age 50, the maximum you can contribute is $69,000.
- If you’re 50 or older, you can contribute $76,500.
If you’re not sure how much you have contributed so far this year, review your most recent paystub under the YTD column for the account or login to your retirement account to view the YTD contribution total.
You can also call HR or your plan provider.
Deadline to make your final contributions if you want it to count for this year:
- Dec 31, 2024
SEP IRA
Total You Can Contribute as an Employee:
- The maximum you can contribute is 25% of your compensation up to $69,000.
- No catchup contribution if you are age 50 or older
Total You Can Contribute if You’re Self-Employed:
- The maximum you can contribute is the lesser of $69,000 or 25% of your net adjusted self-employment income
Steps to determine your net adjusted self-employment income:
- Step 1 – determine your gross revenue.
- Step 2 – subtract business expenses from gross revenue.
- Step 3 – subtract half your self-employment tax.
Deadline to make your final contributions if you want it to count for this year:
Contributions for a given tax year can be made up to the final tax filing date, including extensions.
- The deadline to contribute for the year 2024 is the tax filing deadline in 2025.
In other words, if you plan to submit your 2024 tax filing without an extension, the deadline to contribute is April 15, 2025. If you file an extension, the deadline to contribute is October 15, 2025.
SIMPLE IRA
Total You Can Contribute as an Employee:
- If you are under age 50, the maximum you can contribute is $16,000.
- If you’re 50 or older, you can contribute $19,500 this year ($16,000 plus $3,500 catch up contribution).
Deadline to make your final contributions if you want it to count for this year:
- Dec 31, 2024 if you work for an employer.
- Jan 30 of the following year (i.e. Jan 30, 2025) if you are self-employed and have no employees
