The Internal Revenue Service (IRS) has released the new 2024 contribution limits for investors’ retirement accounts, bringing some noteworthy changes. These adjustments impact 401(k) plans, individual retirement accounts (IRAs), and other retirement savings vehicles.
For 401(k) plans, the employee contribution limit will increase to $23,000 in 2024, marking a slight uptick from the previous year’s limit of $22,500. Savers aged 50 and older will still have the opportunity to make catch-up contributions, which will remain unchanged at $7,500. It’s essential to note that these new limits also extend to 403(b) plans, most 457 plans, and Thrift Savings Plans.
On the individual retirement account (IRA) front, the IRS has raised the contribution limits. In 2024, investors will be able to save up to $7,000, compared to the previous year’s limit of $6,500. The catch-up contribution limit for those aged 50 and older will stay at $1,000.
Additionally, the adjusted gross income phaseout range for Roth IRA contributions will expand in 2024, potentially making more Americans eligible. For single individuals and heads of households, the phaseout range will now be between $146,000 and $161,000, as opposed to the range of $138,000 to $153,000 in 2023. Married couples filing jointly will see their phaseout range increase to between $230,000 and $240,000 in 2024, up from the previous limits of $218,000 to $228,000.
Furthermore, the IRS has made adjustments to income ranges that determine eligibility for the retirement savings contributions credit and the ability to deduct pretax IRA deposits when participating in a workplace retirement plan. These updates aim to provide more financial flexibility and support for individuals planning their retirement savings.