The Internal Revenue Service (IRS) recently announced that the amount individuals can contribute to their 401(k) plans in 2024 will increase to $23,000, up from the 2023 limit of $22,500. This adjustment is part of a series of cost-of-living adjustments impacting dollar limitations for pension plans and other retirement-related items for the tax year 2024.
In addition to the increased 401(k) contribution limit, the IRS has also issued a slew of other adjustments related to retirement savings for the upcoming year:
- The annual contribution limit to 401(k), 403(b), 457 plans, and the federal government’s Thrift Savings Plan has been raised to $23,000.
- For those aged 50 and over, the IRA catch-up contribution limit remains at $1,000. However, a new provision includes a cost-of-living adjustment for future years.
- Participants aged 50 and over in 401(k), 403(b), and most 457 plans, including the federal government’s Thrift Savings Plan, can contribute a maximum of $30,500.
- The annual limit for traditional IRAs, Roth IRAs, and Saver’s Credit eligibility has also been increased.
- Phase-out ranges for single taxpayers covered by workplace retirement plans have risen to between $77,000 and $87,000. For married couples filing jointly with one spouse covered by a workplace retirement plan, the phase-out range is now $123,000 to $143,000. Covered married individuals filing separately have a phase-out range of $0-$10,000.
- The income phase-out range for Roth IRA contributions is now $146,000 to $161,000 for singles and heads of household, and $230,000 to $240,000 for married couples filing jointly.
- Saver’s Credit income limits have been raised to $76,500 for married couples filing jointly; $57,375 for heads of household; and $38,250 for singles and married individuals filing separately.
- Individuals can now contribute up to $16,000 to their SIMPLE retirement accounts.
Additionally, the IRS highlighted changes under SECURE 2.0 for 2024:
- The limitation on premiums paid with respect to a qualifying longevity annuity contract has been increased to $200,000.
- The deductible limit on charitable distributions has been adjusted to $105,000.
- A new deductible limit of up to $53,000 has been added for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity.
The full details of these and other retirement-related cost-of-living adjustments for 2024 are available in Notice 2023-75 on the IRS website.
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