IRS has determined new 401k and IRA contribution limits for 2024
Exciting news for your financial future! Read the official notice on the IRS website here.
The Internal Revenue Service announced an increase in the 401k and IRA contribution limits for 2024. Now you can save even more for your retirement and secure a brighter tomorrow.
Drumroll, please…
The contribution limit for the 401(k), 403(b), and the majority of 457 plans, plus the Federal Government's Thrift Savings Plan, just got bumped up from $22,500 to $23,000.
The annual contribution limit for an IRA has increased from $6,500 to $7,000, and individuals aged 50 and over can make a catch-up contribution of $1,000.
Catch-Up Contribution Limits for Retirement Plans in 2024
For employees aged 50 and over who are enrolled in 401(k), 403(b), and most 457 plans, including the federal government's Thrift Savings Plan, the catch-up contribution limit will remain at $7,500 in 2024. This means that participants in a 401(k), 403(b), most 457 plans, and the Thrift Savings Plan who are 50 and older, will be allowed to contribute up to $30,500 in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains at $3,500 for 2024.
For 2024, the income range eligibility for deductible contributions to traditional IRAs, contributions to Roth IRAs, and claiming the Saver's Credit increased for 2024.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer's spouse was covered 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 taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2024:
Provided an individual satisfies specific criteria, contributions to a traditional IRA can be tax-deductible. However, if the taxpayer or their spouse participated in a retirement plan at their place of employment during that year, the deduction may be diminished or phased out altogether based on the individual's filing status and income. It's worth noting that if neither the taxpayer nor their spouse is covered by a retirement plan at work, the deduction phase-outs do not apply. Below are the phase-out ranges for 2024:
The phase-out range for single taxpayers covered by a workplace retirement plan has increased from $73,000-$83,000 to $77,000-$87,000.
The phase-out range for married couples filing jointly for IRA contributions is increased to $123,000 - $143,000 if the contributing spouse is covered by a workplace retirement plan, up from $116,000 - $136,000.
The phase-out range for an IRA contributor not covered by a workplace retirement plan but married to someone who is covered is now between $230,000 and $240,000, previously between $218,000 and $228,000.
The phase-out range for a married person filing separately that has a workplace retirement plan remains between $0 and $10,000 without any annual cost-of-living adjustment.
Additional changes under the SECURE 2.0 Act:
The limitation on premiums paid with respect to a qualifying longevity annuity contract 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 an individual retirement account made directly by the trustee to a split-interest entity. For 2024, this limitation is increased to $53,000, up from $50,000.
Updates to tax regulations for 2024:
Qualifying longevity annuity contracts have a premium limitation of $200,000.
The deductible limit on charitable distributions is increased to $105,000.
A deductible limit of $53,000 is 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.
This information is intended for information purposes only. Any reader understands that Apex Benefit Group is not providing legal advice, tax advice, or professional services in this article. This article serves to offer practical information regarding the subject matter and is not a comprehensive resource.
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One valuable option that employees often overlook is enrolling in voluntary benefits offered by their employer. These benefits can provide an added layer of financial security and peace of mind for you and your loved ones.