If you haven’t yet maxed out your IRA contributions for 2024, there’s still time. You have until the April tax deadline to contribute and either reduce your 2024 tax bill (Traditional IRA) or lock in tax-free growth (Roth IRA). Here’s what you need to know to make the most of this opportunity.
The 2024 Deadline is April 15, 2025
The final day to make your IRA contributions for 2024 is the tax filing deadline in April 2025. This deadline is critical for anyone looking to maximize their retirement savings for the previous year and potentially reduce their taxable income through deductible contributions.
Making your contribution by this April deadline allows these funds to be counted for the 2024 tax year, providing a direct path to both grow your retirement savings and manage your taxes effectively.
The Standard Contribution Limit is $7,000
The 2024 Contribution Limit is $7,000 For 2024, the IRA contribution limit is $7,000, or $8,000 if you’re age 50 or older. This cap applies to all of your Traditional and Roth IRAs combined. If you have other retirement accounts like a SEP IRA or a 401(k), different limits apply, which could enable additional contributions.
Contributing to a Roth vs Traditional IRA
Choosing between a Roth and Traditional IRA involves understanding their tax implications. Traditional IRAs allow for pre-tax contributions, lowering your taxable income now, but you’ll pay taxes on withdrawals in retirement. Roth IRAs, on the other hand, are funded with after-tax dollars, meaning no upfront tax break, but withdrawals are tax-free in retirement.
This decision hinges on several factors, including your current tax rate compared to what you expect in retirement. If you believe you’ll be in a higher tax bracket when you retire, a Roth IRA could offer more tax advantages. Conversely, if you expect a lower tax rate in retirement, the immediate tax deduction from a Traditional IRA might be more beneficial.
See if we’re right for you to determine which IRA type aligns best with your tax situation and retirement goals.
Making Your Contribution: An Important Consideration
As you prepare to make your IRA contribution, an essential consideration is to specify that your deposit should count towards the 2024 tax year, if contributing in 2025. This detail is vital for ensuring your financial institution accurately processes your contribution for the correct tax year.
Conclusion: Don’t Leave Money on the Table
Making your IRA contribution before April 15, 2025 is a straightforward way to boost your retirement savings and manage your tax bill. See if we’re right for you to create a comprehensive retirement contribution strategy across all your accounts.
