IRS Increases 2024 Retirement Contribution Limits
The Internal Revenue Service (IRS) recently announced raised limits on contributions to various retirement accounts for 2024, a move influenced by the escalating cost of living.
Key Highlights:
401(k), 403(b), 457 plans, and Thrift Savings Plan: The annual individual contribution limits will increase by $500, setting the new limit at $23,000. For those aged 50 and above, an additional contribution of $7,500 is allowed, bringing the total to $30,500 for the year.
IRA Plans: The contribution limit is raised to $7,000 from the previous $6,500. For individuals 50 or older, the catch-up contribution limit is set at $8,000.
Phase-Out Income Thresholds for IRA:
- Single taxpayers with workplace retirement plans: Phase-out range is now $77,000 to $87,000, previously $73,000 to $83,000.
- Married couples filing jointly (with one spouse contributing to an IRA and covered by a workplace retirement plan): The phase-out range has risen to $123,000 to $143,000, up from $116,000 to $136,000.
- IRA contributors not covered by workplace plans, but with a spouse who is, see the phase-out range increase to $230,000 - $240,000 from $218,000 - $228,000.
- For those married but filing separately and covered by a workplace plan, the range remains unchanged at $0 to $10,000.
Roth IRA:
- The contribution cap for 2024 is raised to $7,000 from $6,500.
- Phase-outs based on income have also been expanded:
- Singles and heads of household: $146,000 to $161,000, an $8,000 increment.
- Married couples filing jointly: $230,000 to $240,000, a $12,000 rise.
- Those married but filing separately remain at the consistent range of $0 to $10,000.
SIMPLE IRA: The limit for 2024 will be $16,000, up from $15,500. This plan caters to small-business employees and the self-employed.
Saver’s Credit: The income thresholds for qualifying workers have been updated:
- Married couples filing jointly: $76,500, up from $73,000.
- Heads of household: $57,375, a raise from $54,750.
- Singles and those married but filing separately: $38,250, previously $36,500.
The IRS has provided a comprehensive outline of these 2024 alterations on their official website.