WASHINGTON — The Internal Revenue Service announced today that the amountindividuals can contribute to their 401(k) plans in 2024 has increased to $23,000, upfrom $22,500 for 2023.
The IRS today also issued technical guidance regarding all of the cost of livingadjustments affecting dollar limitations for pension plans and other retirement-relateditems for tax year 2024 in Notice 2023-75.
Highlights of changes for 2024
The contribution limit for employees who participate in 401(k), 403(b), and most 457plans, as well as the federal government’s Thrift Savings Plan is increased to$23,000, up from $22,500.
The limit on annual contributions to an IRA increased to $7,000, up from $6,500. TheIRA catch up contribution limit for individuals aged 50 and over was amended underthe SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost of livingadjustment but remains $1,000 for 2024.
The catch-up contribution limit for employees aged 50 and over who participate in401(k), 403(b), and most 457 plans, as well as the federal government’s ThriftSavings Plan remains $7,500 for 2024.
Therefore, participants in 401(k), 403(b), andmost 457 plans, as well as the federal government’s Thrift Savings Plan who are 50and older can contribute up to $30,500, starting in 2024. The catch-up contributionlimit for employees 50 and over who participate in SIMPLE plans remains $3,500 for2024.
The income ranges for determining eligibility to make deductible contributions totraditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2024.
Taxpayers can deduct contributions to a traditional IRA if they meet certainconditions. If during the year either the taxpayer or the taxpayer’s spouse wascovered by a retirement plan at work, the deduction may be reduced, or phased out,until it is eliminated, depending on filing status and income. (If neither the taxpayernor the spouse is covered by a retirement plan at work, the phase-outs of thededuction do not apply.) Here are the phase out ranges for 2024:
For single taxpayers covered by a workplace retirement plan, the phase-out rangeis increased to between $77,000 and $87,000, up from between $73,000 and$83,000.
- For married couples filing jointly, if the spouse making the IRA contribution iscovered by a workplace retirement plan, the phase-out range is increased tobetween $123,000 and $143,000, up from between $116,000 and $136,000.
- For an IRA contributor who is not covered by a workplace retirement plan and ismarried to someone who is covered, the phase-out range is increased to between$230,000 and $240,000, up from between $218,000 and $228,000.
- For a married individual filing a separate return who is covered by a workplaceretirement plan, the phase-out range is not subject to an annual cost-of-livingadjustment and remains between $0 and $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA isincreased to between $146,000 and $161,000 for singles and heads of household,up from between $138,000 and $153,000. For married couples filing jointly, theincome phase-out range is increased to between $230,000 and $240,000, up frombetween $218,000 and $228,000. The phase-out range for a married individual filinga separate return who makes contributions to a Roth IRA is not subject to an annualcost-of-living adjustment and remains between $0 and $10,000.
The income limit for the Saver’s Credit (also known as the Retirement SavingsContributions Credit) for low- and moderate-income workers is $76,500 for marriedcouples filing jointly, up from $73,000; $57,375 for heads of household, up from$54,750; and $38,250 for singles and married individuals filing separately, up from$36,500.
The amount individuals can contribute to their SIMPLE retirement accounts isincreased to $16,000, up from $15,500. Additional changes made under SECURE 2.0 are as follows: - The limitation on premiums paid with respect to a qualifying longevity annuitycontract to $200,000. For 2024, this limitation remains $200,000.
- Added an adjustment to the deductible limit on charitable distributions. For 2024,this limitation is increased to $105,000, up from $100,000.
- Added a deductible limit for a one-time election to treat a distribution from anindividual retirement account made directly by the trustee to a split-interest entity. For2024, this limitation is increased to $53,000, up from $50,000.
This information has been extracted from the IRS Newswire sent to D&E email and is shared for the purpose of informing our clients. If you want more information, go to the official website of the Internal Revenue Service: https://www.irs.gov – November 1, 2023