IRS Greenlights Higher Retirement Contributions
Plan Smarter, Retire Richer: Your 2024 Guide to IRS Updates
Good news for retirement savers! The IRS announced increased contribution limits and adjusted income phase-out ranges for retirement plans in 2024 due to inflation. (Notice 2023-75)
Here’s a summary of some of the changes:
401(k) and 403(b) Plans
You can contribute up to $23,000, a $500 increase from 2023. The catch-up amount for those 50 and older remains $7,500.
IRAs
Traditional and Roth IRA contribution limits rise to $7,000, up from $6,500. The catch-up for 50 and older also stays at $1,000.
Traditional IRA Phase-out Amounts
Income ranges where deductions for traditional IRA contributions start to phase out are adjusted slightly upward for individuals and couples, both with and without workplace retirement plans.
- Singles with workplace retirement plan: Phase-out range increases to $77,000-$87,000 (up from $73,000-$83,000).
- Married couples filing jointly (spouse with workplace plan): Phase-out range increases to $123,000-$143,000 (up from $116,000-$136,000).
- Spouse not covered by workplace plan (married filing jointly): Phase-out range increases to $230,000-$240,000 (up from $218,000-$228,000).
- Married filing separately (covered by workplace plan): No change, phase-out range remains $0-$10,000.
Remember, these are income ranges where the deduction begins to phase out, not completely disappear.
Roth IRA Phase-out Amounts
Similar to traditional IRAs, the income ranges for Roth IRA phase-out are also adjusted slightly upward for married couples and singles.
- Married couples filing jointly: Income range for phase-out increased to $230,000-$240,000 (up from $218,000-$228,000).
- Single taxpayers: Income range for phase-out increased to $146,000-$161,000 (up from $138,000-$153,000).
- Married filing separately: Income range for phase-out remains unchanged at $0-$10,000.
Note: these are the income ranges where contributions start to be reduced, not completely eliminated.
2024 AGI Limit for the Saver’s Credit
The income limit for claiming the saver’s credit, which rewards low- and moderate-income workers for retirement savings, increases for all filing statuses.
Here are some other 2024 retirement plan amounts, as compared with 2023:
| Qualified Plan Limits | 2024 | 2023 |
|---|---|---|
| Defined Contribution Plan Dollar limit on additions on Sections 415(c)(1)(A) | $69,000 | $66,000 |
| The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) | $275,000 | $265,000 |
| Annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) | $345,000 | $330,000 |
| SIMPLE deferrals under Section 408(p)(2)(E) | $16,000 | $15,500 |
| SIMPLE catch-up contributions for those age 50 and older | $3,500 | $3,500 |
| Compensation defining highly compensated employee under Section 414(q)(1)(B) | $155,000 | $150,000 |
| Compensation defining key employee in a top-heavy plan under Section 416(i)(1)(A)(i) | $220,000 | $215,000 |
| Compensation triggering Simplified Employee Pension contribution requirement under Section 408(k)(2)(C) | $750 | $750 |
Overall, these adjustments offer you more flexibility and potential tax benefits when saving for your golden years. Remember to consult with a financial advisor for personalized guidance based on your individual circumstances.
For more information and with any planning questions, please contact a Brady Ware advisor.
Questions?
Adam manages a variety of tax and accounting engagements for business clients in numerous industries, including manufacturing, real estate, construction, alternative investments, and professional services. He has experience in federal tax, multi-state corporate income and franchise tax, and municipal income tax. In addition to his tax compliance background, Adam specializes in preparing and managing complex partnership engagements.