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What’s the Most You Can Earn to Invest in a Roth IRA?

If your income exceeds the limit, you can't use this type of retirement plan

By

澳洲幸运5开奖号码历史查询:Matt Ryan Webber

Updated May 28, 2024

Reviewed by Margaret James

Fact checked by

Betsy Petrick

Part of the Series

What 50-Year-Olds Need To Know About Roth IRAs

What You Need to Know About Roth IRAs

Approaching Retirement

Strategies Now

Withdrawals

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A Roth IRA is a tax-advantaged retirement savings vehicle that allows for ta𒁏x-free withdrawals if certain conditions are satisfied.

A Roth IRA forms an integral part of many investors’ retirement planning, but they are not available for everyone. If you earn too much in a year, you will not be able to make contributions to your Roth IRA for that year.

For some, there are perfectly legal ways around the rule. For everyone else, there are alternatives to a Roth IRꦡA.

Key Takeaways

If you earn too much in a tax year, you will be barred from contributing to your Roth IRA for that year. The IRS revises these income limits every year.
Make sure you check the limits before contributing to your Roth IRA, or you may have to pay a penalty.
If you earn too much to contribute to your Roth IRA, you have several options. You can contribute to another Roth IRA on behalf of your spouse or contribute to a nondeductible IRA, which has no income limits.

Income Limits for Roth IRAs

There are actually two income limiꦏtations for eligibility to contribute to a Roth IRA. The upper boundary is the most important for most peoplꦐe, and we’ll come to that below.

First, though, it’s worth noting that you cannot contribute more to a Roth IRA than you received in earned income for the year. This income can come from wages, salaries, tips, professional fees, and bonuses. But you can't take a career break or a sabbatical, live on your savings for that year, and still add money to your Roth IRA for that tax year.

There is also an upper limit on who can contribute to a Roth IRA, and how much they can add per tax year. Roth IRAs have several limitations concerning 澳洲幸运5开奖号码历史查询:filing status and 澳洲幸运🌸5开奖号码历史查询:modified adjusted gross income (M🎀AGI). (Your MAGI is your income reduced by certain deductions, such as contributions to a 澳洲幸运5开奖号码历史查询:traditional IRA, student loan interest, tuition and fees, and foreign earnings.)

If your MAGI is above a certain amount, which the IRS adjusts annuaꩲlly, you become ineligible to contribute to a Roth IRA.

The chart below shows the figures for 2023 and 2024.

Do You Qualify for a Roth IRA?
Category	Income Range for 2023 Contribution	Income Range for 2024 Contribution
Married and filing a joint tax return	Full: Less than $218,000 Partial: From $218,000 to less than $228,000	Full: Less than $230,000 Partial: From $230,000 to less than $240,000
Married, filing a separate tax return, lived with spouse at any time during the year	Full: $0 Partial: Less than $10,000	Full: $0 Partial: Less than $10,000
Single, head of household, or married filing separately without living with spouse at any time during the year	Full: Less than $138,000 Partial: From $138,000 to less than $153,000	Full: Less than $146,000 Partial: From $146,000 to less than $161,000

Here’s how to use this table:

Look up your tax filing status in the left column.
Look at the relevant column for your intended tax year.
If your MAGI is below the full amount, you can contribute up to 100% of your income or the 澳洲幸运5开奖号码历史查询:Roth IRA contribution limit—whichever is less. The contribution limit in 2023 is $6,500 ($7,000 in 2024), or $7,500 ($8,000 in 2024) if you are over age 50.
If your income falls within the partial range, subtract your income from the full level and then divide that amount by the phaseout range to determine the percentage of the maximum that you are allowed to contribute.

If your income is above the upper limit✤ of the range for partial contributions for♉ a given year, you will not be able to contribute any money to your Roth IRA for that year.

Important

If you have more than one IRA, or your income gets an unexpected boost, it's easy to make the mistake of contributing more than the allowable maximum. Remember, the annual limit is for all your IRAs, not per account. Exceeding this limit can cost you a 6% penalty on the excess each year until you rectify the mistake.

Making Additional Contributions

If you earn too much to contribute to your Roth IRA♋, there are several ways you can still put money aside for ret🥂irement.

One way of doing this is to use a spousal Roth IRA. An individual may fund a Roth IRA 澳洲幸运5开奖号码历史查询:on behalf of a spouse who earns little or no income. Spousal Roth IRA contributions are subject to the same rules and limits as regular Roth IRA contributions. The spousal Roth IRA is held separately from the Roth IRA of the individual making the contribution because Roth IRAs cannot be joint accounts.

Another way of getting around the Roth IRA's income limitations is instead to 澳洲幸运5开奖号码历史查询:contribute to a nondeductible IRA, which is available to anyone no matter how much income they earn. Just like a Roth IRA, this contribution is made with after-tax dollars, money that has already been taxed.

Then, using a tax strategy called a 澳洲幸运5开奖号码历史查询:backdoor Roth IRA, you convert that money to a Roth IRA.

Can I Have Multiple Roth IRAs?

You can have multiple traditional and Roth IRAs, but your total cash contributions can't exceed the annual maximum, and the IRS may limit your investment options.

What Is the Maximum Income Limit to Contribute to a Roth IRA?

If you file taxes as a single person, your modified adjusted gross income (MAGI) mu🌟st be under $153,000 for the tax year 2023 and under $161,000 for the tax year 2024 to contribute to a Roth IRA.

If you're married and file jointly, your MAGI must be under $228,000 for the tax year 2023 and under $240,000 for the tax year 2024.

What Happens if I Contribute to a Roth IRA Over the Income Limit?

The IRS will charge you a 6% penalty tax on the excess amount for each year you don't take action to correct the error.

For example, if you contributed $1,000 more than you were allowed, you'd owe $60 each year until you correct the mistake.

The Bottom Line

Roth IRAs are a powerful tool for retirement investing, but they have limitations. Specifically, if you earn too much in a tax year, you will be barred from contributing to🍃 your Roth IRA for that year.

The IRS updates these income limits every y༺ear, so make sure you check them before contributing to your Roth IRA, or you may be charged a pen🍃alty.

If you earn too much to contribute to your Roth IRA, there are several options open to you. You can contribute to another Roth IRA on behalf of your married partner, or instead c✱ontribute to a nondeductible IRA, which has no income limits.

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