IRAs and Roth IRAs

IRAs and Roth IRAs

An Individual Retirement Account (IRA) is a personal savings plan that allows clients to set aside funds for their retirement. Contributions are tax deductible. Investments made within traditional IRAs grow tax-deferred (meaning you pay income taxes on the contributions and ALL the investment growth when removing the money).

A Roth IRA is similar to an IRA except you fund it without taking a deduction. However, the money in a Roth IRA is still allowed to grow tax-free and be removed tax-free in retirement.

The following are the current and future contribution limits.

Year 2024 IRA and Roth IRA contribution limit is $7,000.

Catch-up contribution over age fifty is an extra $1,000 (total of $8,000).

Not everyone can contribute to an IRA.

For Single-Filers—the phase-out is now $77,000 to $87,000 of AGI (Adjusted Gross Income).

For Married-Filers Covered by a Company Retirement Plan—the phase-out is $123,000 to $143,000 of AGI. For a married filer who isn’t covered by a company retirement plan, but whose spouse is covered, the phase-out is $218,000 to $228,000 of AGI.

Not everyone can contribute to a Roth IRA.

For Single & Head of Household—the phase-out is $146,000 to $161,000.

For Married Joint-Filers—the phase out is $230,000 to $240,000.

If you have questions about whether an IRA or Roth IRA is a good planning tool for you or if you have questions about the phase out rules, please contact our office and we’d be happy to help.