April 17, 2025
If you filed an extension for your 2024 taxes, good news, you have until the extended filing deadline of October 15, 2025, to fund your IRA for 2024.
While you are funding your IRA for 2024, it's best to fund your account for 2025 at the same time. Getting your contributions out of the way early keeps your finances on track, simplifies year-end tax planning, and lets your investments grow for longer.2024 & 2025 IRA Contribution Limits
For both 2024 and 2025, the annual contribution limits are:
These limits apply to the total across all your IRA and Roth IRA accounts, not to each account separately.
Roth IRA Income Limits
Your eligibility to contribute directly to a Roth IRA depends on your income. If your income is near or above the limit, you can still fund a traditional IRA directly, but to get it into a Roth account, you must do a backdoor Roth conversion. For more information on backdoor Roth conversions, check out our 2024 March article, Backdoor Roth Conversions and Tax-Efficient Retirement.
For more information on why Roth IRAs are important even for high-income earning dentists, check out our August 2024 article, Why Roth Matters: A Guide for Dentists.
Why Funding IRAs Every Year Matters
The relatively modest annual limit makes it easy to overlook IRA contributions. However, small contributions made consistently over time can lead to significant long-term growth. Here's why you should make it a priority every year:
1. Tax-Advantaged Growth Adds Up
Both traditional and Roth IRAs grow tax-deferred (or tax-free, in the case of Roths). That means your earnings compound faster than in a taxable investment account. The earlier you contribute each year, the more time your money has to grow.
2. Every Year Counts
You can't go back and make missed contributions from previous years. If you skip funding an IRA this year, that opportunity is lost permanently. That means losing out on both the contribution itself and decades of potential growth.
For example, let's say you contribute $7,000 annually for 10 years and then let it grow untouched for another 10 years. At a 7% annual return, here's what that looks like:
That's almost double your contributions purely from growth. And if you keep contributing every year beyond that? The numbers compound even faster.
Depending on the account type, this growth is tax-deferred (Traditional IRA) or tax-free (Roth IRA), an especially valuable feature if your taxable income rises as your practice grows.
3. The Catch-Up Window Is Short
If you're behind on retirement savings, every year matters. IRAs give you an easy, consistent way to make progress. And once you hit age 50, you get a small bump in the contribution limit, so funding consistently before that helps make the most of the base limit while you can.
4. Flexibility Later On
Roth IRAs, in particular, offer a lot of flexibility. You can withdraw your contributions (not earnings) at any time tax-free, and after five years and age 59.5, withdrawals are completely tax-free. Building a Roth early gives you more options down the road.
Don't underestimate the power of consistent IRA contributions, whether you're just starting out or well on your way to retirement. Even with a $7,000 limit, year-after-year funding can make a huge difference over time. Remember, if you filed a 2024 tax extension, you have until the extended deadline of October 15, 2025, to fund your IRA for 2024, and while you're at it, take care of 2025 to stay ahead of the game.
Not sure where to start? Contact us today!