How much cash-on-hand can be invested into a Roth for 2024

[5acres217]

With cash-in-hand, I would like to invest the maximum amount into a 2024 Roth IRA.  That number is a little confusing to understand.  On one hand, my wife and I meet the age requirement and the income requirement.  She doesn't work so am I restricted to a joint Roth, or can we each have one.  Is it $7000 or $8000 (I believe $8k to be the $1k makeup total).

The additional confusion comes when considering other former 401K IRA investments.  Do they limit or restrict the Roth investment?

Then I just read in TurboTax that a Traditional IRA was the way to go for a specific client, not a Roth.

So, I'm looking for advice.

[Opus 17 · Accepted solution]

There is no such thing as a joint IRA, IRAs are owned by individuals only.  However, a non-working spouse may contribute to an IRA using their working spouse's wages as the basis for the contribution.

To contribute to a Roth IRA, you must have compensation from working (wages or self-employment income).  Your contribution limit is $7000, or $8000 if you are over age 50, or your compensation, whichever is less.  Your spouse can contribute from your compensation ($7000 or $8000) a up to the amount of your compensation minus your contribution.  (For example, if you are both over age 50 but your only wages were $10,000, you could contribute $8000 to an IRA in your name but your spouse could only contribute $2000 to an IRA in her name).

Then, if your income is over a certain limit, you may be completely disallowed from making any Roth IRA contributions, that is here.

https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that...

If you can't make a Roth contribution because your income is too high, you can still make a non-deductible contribution to a traditional IRA. This has certain additional complications, especially if you already own an IRA, but we can go into that if needed.

Participation in a qualified workplace plan (401k, 403b or other qualified plan) does not affect your IRA limits.  Even though the plans have a similar purpose, they have different limits and are covered by different laws, so a 401k does not disqualify you from contributing to a Roth IRA as long as your income is otherwise eligible. 

[VolvoGirl]

Is the increase age 55 or 50?   IRS pub 590-A says 50.

https://www.irs.gov/pub/irs-pdf/p590a.pdf 

[Opus 17]

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@VolvoGirl wrote:

Is the increase age 55 or 50?   IRS pub 590-A says 50.

https://www.irs.gov/pub/irs-pdf/p590a.pdf 

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I originally wrote 50, didn't I?  Unless someone else edited the post for me.

The IRA catchup provision is age 50 and older, the HSA catch-up provision is age 55 and older.   I don't know why they are different and I do get them mixed up some times.