IRS Announces Increases in Retirement Plan Contribution Limits for 2024
In November, the IRS announced new contribution limits for retirement plans, which will take effect in 2024. For employees participating in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, the contribution limit will increase to $23,000 (up from $22,500). The annual contribution limit to IRAs will increase to $7,000 (up from $6,500).
Catch-up contribution limits, for those aged 50 and older, remain the same. For employees participating in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, the catch-up contribution limit remains $7,500, which means those employees can contribute up to $30,500 in 2024. For employees aged 50 and over who participate in SIMPLE plans, the catch-up limit remains $3,500. Although the IRA catch-up contribution limit for people aged 50 and over was amended under the SECURE 2.0 Act of 2022 to include an annual cost of living adjustment, the limit will remain $1,000 for 2024.
Taxpayers are eligible to make deductible contributions to traditional IRAs, contribute to Roth IRAs, and claim the Saver’s Credit, and the income ranges for determining such eligibility have all increased for 2024. When contributing to a traditional IRA, taxpayers can deduct contributions if they meet certain conditions. If the taxpayer or their spouse is covered by a retirement plan at work, the deduction may be reduced or phased out until eliminated. In 2024, those new phase-out ranges will be:
- For single taxpayers covered by an employer’s retirement plan: $77,000 – $87,000
- For married couples filing jointly, if the spouse making the contribution is covered by a workplace retirement plan: $123,000 – $143,000
- For an IRA contributor who is not covered by a workplace retirement plan, but who is married to someone who is: $230,000 – $240,000
- For married individuals filing a separate return who is covered by a workplace retirement plan, the range remains $0 – $10,000
The income phase-out ranges for taxpayers contributing to Roth IRAs will also increase (except for married individuals filing separate returns, which will remain $0 – $10,000).
- For singles and heads of household: $146,000 – $161,000
- For married couples filing jointly: $230,000 – $240,000
The amount an individual taxpayer can contribute to their SIMPLE retirement account will increase from $15,500 to $16,000 in 2024. The new income limits for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low and moderate-income workers will be:
- $76,500 for married couples filing jointly
- $57,735 for heads of household
- $38,250 for singles and married individuals filing separately
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