The Internal Revenue Service announced on November 1, 2023 that the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023.
Highlights of changes for 2024
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan is increased to $23,000.
The limit on annual contributions to an IRA has increased to $7,000.
Those individuals participating in a 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan, who are 50 years old and older, may contribute up to $30,500, beginning in 2024.
The amount individuals can contribute to their SIMPLE retirement accounts is increased to $16,000.
In addition, starting in 2024 there will be an increase in the income ranges for determining eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs, and to claim the Saver’s Credit.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions.
Phase out ranges for 2024:
Single Taxpayers covered by a workplace retirement plan: The phase-out range is increased to between $77,000 and $87,000.
Married couples filing jointly (if the spouse making the IRA contribution is covered by a workplace retirement plan): The phase-out range is increased to between $123,000 and $143,000.
IRA contributor (who is not covered by a workplace retirement plan and is married to someone who is covered): The phase-out range is increased to between $230,000 and $240,000.
Income phase-out ranges for 2024:
Taxpayers making contribution to a Roth IRA: The income phase-out range is increased to between $146,000 and $161,000 for singles and heads of household.
For married couples filing jointly: The income phase-out range is increased to between $230,000 and $240,000.
Income Limits for 2024 for the Saver’s Credit:
(also known as the Retirement Savings Contributions Credit):
Low and Moderate income workers:
$76,500 for married couples filing jointly
$57,375 for heads of household
$38,250 for singles and married individuals filing separately
Additional changes made under SECURE 2.0
An adjustment has been added to the deductible limit on charitable distributions. For 2024, this limitation is increased to $105,000.
A deductible limit 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. For 2024, this limitation is increased to $53,000.
Details on these and other retirement-related cost-of-living adjustments for 2024 are in Notice 2023-75, available on IRS.gov.
For more information on the adjustments to the 401(k) regulations and other retirement-released cost-of-living adjustments, refer to the link below to the IRS Notice or contact one of the experienced tax professionals at Bormel, Grice & Huyett, P.A. at 301-953-3259 or 410-792-7259