IRA IRA Contribution Rules 1 — Questions and Answers
Question 1: What is the standard IRA contribution limit for individuals under age 50 in 2024?
- $5,500
- $6,000
- $7,000
- $6,500 (Correct answer)
Correct answer: $6,500
For 2024, the IRA contribution limit for individuals under age 50 is $7,000.
Question 2: What is the catch-up contribution amount allowed for individuals age 50 or older in 2024?
- $500
- $1,000 (Correct answer)
- $1,500
- $2,000
Correct answer: $1,000
Individuals age 50 or older can contribute an additional $1,000 catch-up contribution to their IRA in 2024.
Question 3: Which of the following types of income qualifies as compensation for IRA contribution purposes?
- Rental income
- Dividend income
- W-2 wages (Correct answer)
- Pension distributions
Correct answer: W-2 wages
W-2 wages (earned income) qualify as compensation for IRA contribution purposes, while passive income sources do not.
Question 4: What is the deadline for making an IRA contribution that counts toward the prior tax year?
- December 31 of the tax year
- January 31 of the following year
- April 15 of the following year (Correct answer)
- October 15 of the following year
Correct answer: April 15 of the following year
IRA contributions for a given tax year can be made up to the tax filing deadline, typically April 15 of the following year.
Question 5: A taxpayer can contribute to an IRA even if they also participate in an employer-sponsored retirement plan.
- True, always
- False, never
- True, but the deductibility may be limited (Correct answer)
- True, but only to a Roth IRA
Correct answer: True, but the deductibility may be limited
A taxpayer covered by a workplace retirement plan can still contribute to a traditional IRA, but their deduction may be phased out based on income.
Question 6: Which of the following individuals CANNOT contribute to a traditional IRA?
- A 30-year-old with earned income of $40,000
- A 72-year-old with W-2 income of $25,000 (Correct answer)
- A 45-year-old self-employed consultant
- A 60-year-old part-time worker
Correct answer: A 72-year-old with W-2 income of $25,000
Prior to SECURE Act 2.0, individuals age 70½ or older could not contribute to a traditional IRA; however, SECURE Act 2.0 removed this age restriction starting in 2020.
IRA IRA Contribution Rules 1
What is the standard IRA contribution limit for individuals under age 50 in 2024?