The amount that can be saved for retirement in 401(k) plans and other types of plans has been increased for 2024.
The Internal Revenue Service has announced that contributions of up to $23,000 will be allowed next year, up from $22,500 in 2023. That applies to 401(k)s, 403(b)s, most 457 plans and the government’s Thrift Savings Plan.
For those age 50 and older, the catch-up contribution limit is held steady at $7,500 for 2024, meaning someone who is 50 or older can contribute a total of $30,500 next year. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.
The limit on an individual retirement account has also been boosted by $500 to $7,000 in 2024 for traditional and Roth IRAs, while for those over 50 there's a $1,000 limit for catch-up contributions. Although SECURE 2.0 included an annual cost-of-living increase, the limit has not changed for next year.
Income ranges for eligibility to make deductible contributions to an IRA, and to claim the Saver’s Credit, have also been increased.
For those contributing to a workplace retirement plan, taxpayers’ deductions for contributions to an IRA are phased out in stages. The phase-out ranges for 2024 are:
For those contributing to a Roth IRA, the phase out ranges are:
For households on low and medium incomes, eligibility for the Saver’s Credit, aka Retirement Savings Contributions Credit, have increased 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 individuals filing separately, up from $36,500.
Contributions to SIMPLE retirements accounts can be up to $16,000 in 2024, a $500 increase from this year.
Some other changes resulting from SECURE 2.0 include:
Further information on the cost of living adjustments can be found here.
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