Young adults with earned income can usually make annual contributions to tax-favored traditional IRAs or Roth IRAs.

Here’s what you need to know about both kinds of accounts if you’re a young adult or if you have offspring in that category.

That said, this article is targeted to the young adults of the world rather than their parents. Here goes.

Traditional IRA Basics

First and foremost, you can still make a traditional IRA contribution for your 2023 tax year as long as you get it done by April 15, 2024. The maximum contribution for 2023 is the lesser of:

$6,500 or

your earned income for last year, which generally means income from wages or self-employment.

For your 2024 tax year, the maximum IRA contribution is the lesser of1

$7,000 or

your earned income for this year. You can make a contribution for your 2024 tax year anytime between now and April 15, 2025.

If you’re married, your spouse can also make a contribution of up to $6,500/$7,000 as long as you and your spouse have enough combined earned income to cover your combined contributions.

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