You have until the April tax return deadline to set up and fund an IRA for the prior tax year. This means you have until April 15, 2025 to open and contribute to a Roth for 2024. We're also in the window where you can fund your 2025 IRA at the same time. Additional contributions for 2025 can be made until April 15, 2026, and so on. Keep in mind, filing for an extension to submit your return does not extend the deadline for IRA contributions.
The most fundamental rule for Roth IRA contributions is simple: You can only contribute money you've actually earned. This means your contributions must come from:
Salary
Commissions
Bonuses
Important nuances to remember:
If you're a stay-at-home spouse, you can still contribute based on your working spouse's earned income
Rule 2: Annual contribution limits
The IRS sets specific limits on how much you can contribute to a Roth IRA each year. For 2024, these limits are:
50 and older: $8,000 (includes a $1,000 catch-up contribution)
Attempting to contribute more than the annual limit will result in a 6% penalty tax on the excess amount unless promptly removed. If you exceed the Roth IRA contribution limits, you have until the tax filing deadline, plus extensions, to withdraw the excess contributions and any income they earned.
If you earned $5,000 in part-time work, your maximum Roth IRA contribution is $5,000
If you earned $0, you cannot make any Roth IRA contributions
Pro tips for Roth IRA contributions
Remember that contribution limits can change annually, so stay informed. Tax season is an excellent time to review your Roth IRA strategy. For me, this means making contributions as early in the calendar year as I can. I highly recommend getting ahead by maxing out 2025 as soon as you can, and then contributing larger lump sum right at the start of 2026. At the end of the day, compound interest is the name of the game, and early investing means more time for compounding to work.
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