3 Reasons to Max Out Your IRA Before the End of 2024

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Even though 401(k) plans come with higher annual contribution limits than individual retirement accounts (IRAs) do, IRAs offer a big advantage. With an IRA, you can invest your money in individual stocks, whereas with a 401(k), you’re generally limited to different funds (like mutual and index funds) that come with varying fees.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
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Click here to read our full review for free and apply in just 2 minutes. If you have an IRA you haven’t maxed out for 2024, you may want to sneak more money into it before 2024 comes to an end. Here are a few reasons why.1. You can save money on taxesThis year, IRAs max out at $7,000 for savers under the age of 50 and $8,000 for those who are 50 or older. And the more you contribute, up to the limit that applies to you, the more of your income you can shield from the IRS.Traditional IRA contributions are made with pre-tax dollars. So if you put $7,000 into an IRA, the IRS won’t tax you on that specific portion of your earnings.If you earned a lot of money in a savings account or CD this year due to interest rates being high, you should know that that income is taxable. But maxing out an IRA can help offset that tax obligation.2. You can set yourself up with more money for retirementWhen it comes to growing wealth for retirement, your most effective tool is time. Giving your money extra time to grow could lead to higher compounded returns in your IRA. So the more money you’re able to squeeze into your account before the end of the year, the better.Imagine you load up on stocks in your IRA that give you a 10% yearly return, which is consistent with the S&P 500’s average over the past 50 years. If you manage to put $7,000 into that account this year, and you ] leave that money alone for the next 40 years, it’ll be worth about $317,000 — even if you don’t contribute a dollar more.3. You may be less likely to waste money on holiday spendingOne lesser-known IRA rule is that you technically have until next year’s tax-filing deadline of April 15 to finish funding your account for 2024. But there’s a benefit to maxing out your IRA before the end of the current year.If you put that extra money into your IRA in the coming weeks, you might save yourself from needless holiday spending beyond your usual expenses. If you tell yourself you’ll add that money to your IRA in early 2025, you might accidentally blow it on extra stuff for the holidays. And given the pressure and allure of all of those holiday sales, who could blame you?Maxing out an IRA before the end of the year could do your finances a world of good, so aim to increase your contribution rate if you can. And if you don’t yet have an IRA, open one immediately and fund it to the best of your ability so you can start building wealth for retirement.Click here for a list of the best IRAs so you’re able to set yourself up with plenty of money for your senior years.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Even though 401(k) plans come with higher annual contribution limits than individual retirement accounts (IRAs) do, IRAs offer a big advantage. With an IRA, you can invest your money in individual stocks, whereas with a 401(k), you’re generally limited to different funds (like mutual and index funds) that come with varying fees.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

If you have an IRA you haven’t maxed out for 2024, you may want to sneak more money into it before 2024 comes to an end. Here are a few reasons why.

1. You can save money on taxes

This year, IRAs max out at $7,000 for savers under the age of 50 and $8,000 for those who are 50 or older. And the more you contribute, up to the limit that applies to you, the more of your income you can shield from the IRS.

Traditional IRA contributions are made with pre-tax dollars. So if you put $7,000 into an IRA, the IRS won’t tax you on that specific portion of your earnings.

If you earned a lot of money in a savings account or CD this year due to interest rates being high, you should know that that income is taxable. But maxing out an IRA can help offset that tax obligation.

2. You can set yourself up with more money for retirement

When it comes to growing wealth for retirement, your most effective tool is time. Giving your money extra time to grow could lead to higher compounded returns in your IRA. So the more money you’re able to squeeze into your account before the end of the year, the better.

Imagine you load up on stocks in your IRA that give you a 10% yearly return, which is consistent with the S&P 500’s average over the past 50 years. If you manage to put $7,000 into that account this year, and you ] leave that money alone for the next 40 years, it’ll be worth about $317,000 — even if you don’t contribute a dollar more.

3. You may be less likely to waste money on holiday spending

One lesser-known IRA rule is that you technically have until next year’s tax-filing deadline of April 15 to finish funding your account for 2024. But there’s a benefit to maxing out your IRA before the end of the current year.

If you put that extra money into your IRA in the coming weeks, you might save yourself from needless holiday spending beyond your usual expenses. If you tell yourself you’ll add that money to your IRA in early 2025, you might accidentally blow it on extra stuff for the holidays. And given the pressure and allure of all of those holiday sales, who could blame you?

Maxing out an IRA before the end of the year could do your finances a world of good, so aim to increase your contribution rate if you can. And if you don’t yet have an IRA, open one immediately and fund it to the best of your ability so you can start building wealth for retirement.

Click here for a list of the best IRAs so you’re able to set yourself up with plenty of money for your senior years.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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