The Internal Revenue Service (IRS) has announced significant changes to the IRA contribution limits for 2024. Understanding the 2024 IRA Limits is crucial for individuals and families planning their retirement strategies. This article delves into the details of the new limits, including the implications for tax planning and long-term financial security.

Looking to contribute more money into your 401(k) or IRA next year? Now you can. The Internal Revenue Service recently announced that it’s raising both the 401(k) contribution limit and raising the IRA annual limit, each by $500. These new amounts also apply to 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plans.

Here’s a quick breakdown on the changes for 2024:

401(k), 403(b), most 457 plans, and Thrift Savings Plans

  • The contribution limit for participating employees will increase to $23,000, up from $22,500 for 2023.
  • The limit on “catch up” contributions—allowed to participants 50 or older—will remain at $7,500, meaning they can contribute up to $30,500, starting in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.

2024 IRA Contribution Limits: What’s New?

  • The limit on annual contributions to an IRA will increase to $7,000, up from $6,500 for 2023.
  • The IRA catchup contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 to include an annual costofliving adjustment, but remains $1,000 for 2024, meaning participants can contribute up to $8,000.

There are other changes in store for 2024, and true to the IRS, much of it is complicated. But here’s a brief overview:

Adjustments in Roth IRA Phase-Out Ranges for 2024

  • For singles and heads of household, the adjusted gross income phase-out range will rise to between $146,000 and $161,000, up from $138,000 to $153,000 in 2023.
  • For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000.

Additional changes made under SECURE 2.0:

  • An adjustment to the deductible limit on charitable distributions was added, increasing to $105,000, up from $100,000.
  • A deductible limit was added for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity. For 2024, this limitation is increased to $53,000, up from $50,000.

Although most of these changes are fairly modest, you should consult both tax and estate planning professionals to see how they may change your retirement plans.

Want to learn more about these and other new IRS rules or general retirement/benefits-related issues? Contact Accu Data today. We’re happy to answer any questions you have!