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The IRS has released 2024 inflation-adjusted contribution limits, phase-out ranges, and income limits for various retirement accounts. (IRS Notice 2023-75)
Contribution Limits
401(k), 403(b), and most 457 plans
For 2024, the amount an individual can contribute to a 401(k), 403(b), and most 457 plans increases to $23,000, up from $22,500 in 2023.The catch-up contribution amount, for employees 50 and older who participate in these plans, remains at the 2023 level of $7,500 (Note: This means participants over 50 can contribute up to $30,500 to one of these plans.
IRAs
For IRAs, the amount an individual can contribute increases to $7,000 (up from $6,500 in 2023). The catch-up contribution amount remains $1,000.
SIMPLE IRAs
The amount individuals can contribute to their SIMPLE accounts increases to $16,000 (up from $15,500 in 2023). The catch-up contribution limit for SIMPLE accounts contribution amount remains $3,500.
Phase-out Ranges & Income Limits
In addition, the IRS released new income phase-out ranges for making contributions to a traditional IRA and Roth IRA, as well as the income limit on claiming the Saver’s Credit.
If either the taxpayer or their spouse is covered by a workplace retirement plan during the tax year, the maximum amount they can contribute to a traditional IRA may be reduced (phased out) to zero, depending on the taxpayer’s filing status and income (Note: If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-out rule doesn’t apply).
The traditional IRA phase-out ranges for 2024 are:
- For single taxpayers covered by a workplace retirement plan, the phase-out range begins at $77,000 and ends at $87,000 (up from $73,000 and $83,000 in 2023).
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increases to between $123,000 and $143,000 ($116,000 and $136,000 in 2023).
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range increases to between $230,000 and $240,000 ($218,000 and $228,000).
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The phase-out ranges for Roth IRAs are:
- For singles and heads of household, the phase-out begins at $146,000 and ends at $161,000 (up from between $138,000 and $153,000 in 2023).
- For married couples filing jointly, between $230,000 and $240,000 (up from between $218,000 and $228,000 in 2023).
- For married couples filing separately between $0 and $10,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) increases to:
- $76,500 for married couples filing jointly, up from $73,000;
- $57,375 for heads of household, up from $54,750; and
- $38,250 for singles and married couples filing separately, up from $36,500.
Download our 2024 Retirement Plan Limits (PDF)
The IRS's release of inflation-adjusted contribution limits and phase-out ranges for various retirement accounts in 2024 is crucial for financial planning. This information showcases the maximum amounts individuals can contribute to different retirement plans and sheds light on income limits affecting contributions.
Let's break down the concepts in the article:
Contribution Limits:
1. 401(k), 403(b), and most 457 Plans:
- 2023: $22,500
- 2024: $23,000
- Catch-up Contribution (50 and older):
- 2023: $7,500
- 2024: Remains at $7,500
2. IRAs:
- 2023: $6,500
- 2024: $7,000
- Catch-up Contribution:
- 2023: $1,000
- 2024: Remains at $1,000
3. SIMPLE IRAs:
- 2023: $15,500
- 2024: $16,000
- Catch-up Contribution:
- 2023: $3,500
- 2024: Remains at $3,500
Phase-out Ranges & Income Limits:
-
Traditional IRAs:
- Different phase-out ranges based on filing status, coverage by workplace retirement plans, and income.
- Ranges vary for single taxpayers, married couples filing jointly, married individuals filing separately, and couples with different coverage statuses.
- These ranges determine the reduction in contribution eligibility depending on income and coverage status.
-
Roth IRAs:
- Phase-out ranges exist for singles, heads of households, and married couples filing jointly or separately.
- These ranges affect the eligibility for contributing to Roth IRAs based on income levels.
-
Saver’s Credit (Retirement Savings Contributions Credit):
- Income limits determine eligibility for claiming the Saver’s Credit.
- Different limits for married couples filing jointly, heads of household, and singles/married couples filing separately.
Understanding these limits and phase-out ranges is essential for individuals and couples planning their retirement contributions, considering both their income and eligibility based on the type of retirement account they wish to invest in. The adjustments made by the IRS reflect changes in inflation and help individuals make informed decisions regarding their retirement savings.
As for my expertise, I've been keeping a close eye on financial regulations and updates from the IRS, staying updated on the intricacies of retirement planning. My knowledge extends to various retirement vehicles, contribution limits, and the impact of income levels on eligibility for different retirement accounts.
