IRS Increases Contributions Limits to 401(k) and IRA for 2024

The Internal Revenue Service (IRS) has announced several changes and adjustments related to retirement contributions and limits for the year 2024. Here are the key highlights:

1. 401(k) Contribution Limit: The contribution limit for employees participating in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan, has increased to $23,000 in 2024, up from $22,500 in 2023.

2. IRA Contribution Limit: The annual contribution limit for Individual Retirement Accounts (IRAs) has increased to $7,000 in 2024, up from $6,500 in 2023.

3. Catch-Up Contributions: Individuals aged 50 and over can make catch-up contributions. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan, remains $7,500 in 2024, allowing a total contribution of up to $30,500.

4. Income Ranges: The income ranges for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs, and claim the Saver's Credit have increased for 2024.

5. Phase-Out Ranges for Traditional IRA Deductions: The phase-out ranges for traditional IRA deductions have increased for both single taxpayers and married couples filing jointly. These phase-out ranges depend on income and filing status.

6. Phase-Out Ranges for Roth IRA Contributions: The phase-out ranges for Roth IRA contributions have also increased for singles, heads of household, and married couples filing jointly.

7. Saver's Credit: The income limit for the Saver's Credit, aimed at low- and moderate-income workers, has been adjusted upwards.

8. SIMPLE Retirement Account Contributions: The contribution limit for SIMPLE retirement accounts has increased to $16,000 in 2024, up from $15,500 in 2023.

9. Additional Changes: The IRS has made several other adjustments under the SECURE 2.0 Act for 2024, such as limitations on premiums for longevity annuity contracts, deductible limits on charitable distributions, and deductible limits for one-time elections related to individual retirement account distributions.

For detailed information on these changes and other retirement-related cost-of-living adjustments for 2024, individuals can refer to Notice 2023-75 available on the IRS website. These adjustments are important for individuals and employers to plan their retirement contributions and tax strategies for the upcoming year.