Individual retirement accounts (IRAs) are available to anyone with taxable income, even if you have retirement benefits at work. Like other types of retirement accounts, IRAs are tax-advantaged: if you contribute to a traditional IRA, you get the benefit of a tax deduction now, while a Roth IRA can be drawn from tax-free in the future. IRA annual contribution limits are relatively low compared to other types of tax-advantaged accounts—up to $7,000 in total to your IRAs for 2024 or $8,000 if you're 50 or older.
If you have more than one IRA—a Roth IRA and a traditional IRA, for example—you can make $7,000 in contributions across both, not $7,000 each. This can be split however you want, but there are limits on Roth contributions based on your income and filing status. (There are also deduction limits for traditional IRAs if you or a spouse have an employer-sponsored retirement plan.)
While the deadline for contributing to some retirement accounts to gain the tax benefit is Dec. 31, you have a few extra months to make your IRA contributions.
The last day to contribute toward your IRA's annual limit is the filing deadline for that tax year. For example, you have until April 15, 2025—when 2024 tax returns are due—to max out your 2024 IRA contributions. Contributions for 2025 can be made until April 15, 2026, and so on.
Filing for an extension to submit your return does not extend the deadline for IRA contributions.
If you haven't met your maximum for your IRA(s) in 2024 for any reason—you opened the account later in the year or made smaller contributions throughout the year, for example—you can apply contributions in early 2025 as well as extra cash on hand to your 2024 limit. If you end up earning more or having additional money to invest later in the year, you'll be able to take advantage of the maximum tax benefits for both years. You may even be able to get ahead by maxing out 2025 before the end of the year and be ready to contribute a larger lump sum toward the next year right at the start of 2026 (early investing means more time for compounding to work).
The best course of action for your money and investments depends on your personal situation, and it's always a good idea to consult with a tax professional before making any big decisions.
Generally speaking, your IRA contributions will be applied by default to the tax year in which they are made: contributions made before Dec. 31, 2024 will go toward your 2024 limit, while those made on Jan. 1, 2025 and later will apply to 2025. If you want funds deposited on or after Jan. 1 to apply to the previous tax year, contact the brokerage that manages your account. You can likely do this proactively or retroactively up until April 15, but you'll need to find out your brokerage's process for managing tax year preferences.
If you accidentally contribute over the annual limit, you also have until your return is filed to transfer or withdraw the excess. Otherwise, you'll pay a 6% tax penalty on that amount.
