IRS Announces Changes for 2024 Tax Year Regarding Contribution Limits

---

The Internal Revenue Service (IRS) recently announced notable changes concerning retirement plans for the tax year 2024. These changes reflect ongoing efforts to adapt retirement-related regulations to evolving economic conditions and financial needs.

Changes include the contribution limit for 401(k), 403(b), and most 457 plans, along with the federal Thrift Savings Plan, which has been increased to $23,000, up from the previous limit of $22,500 in 2023. The annual contribution limit for Individual Retirement Accounts (IRA) has also been raised to $7,000 from $6,500. There is a catch-up rate for those 50 or older, who can now add an extra $1,000. For participants in 401(k), 403(b), and most 457 plans, as well as the federal Thrift Savings Plan, who are 50 and older, the catch-up contribution limit remains $7,500, allowing a total contribution of up to $30,500 starting in 2024.

Furthermore, income ranges have been adjusted to determine eligibility for deductible contributions to traditional IRAs, contributions to Roth IRAs, and claiming the Saver’s Credit. Phase-out ranges for traditional IRA deductions have been updated, including an increase for single taxpayers to $77,000 to $87,000.

The income phase-out range for Roth IRA contributions has also increased, with singles and heads of household now falling between $146,000 and $161,000. The Saver’s Credit income limit has been adjusted to $76,500 for married couples filing jointly.

Other changes introduced under the SECURE 2.0 Act include increasing the contribution limit for SIMPLE retirement accounts to $16,000 from $15,500. Additionally, adjustments have been made to the limitation on premiums for qualifying longevity annuity contracts, the deductible limit on charitable distributions, and the deductible limit for a one-time election to treat a distribution from an IRA made directly to a split-interest entity.

Details on these and other retirement-related cost-of-living adjustments for 2024 are in Notice 2023-75, available on IRS.gov.