With the 2024 tax year right around the corner, there’s good news coming from the IRS. According to a recent announcement from the tax agency (Notice 2023-75), there will be increases to retirement plan contributions next year due to inflation adjustments.
Here’s a rundown of some of the changes:
Contributions to 401(k) and 403(b) Plans. Taxpayers will be able to contribute up to $23,000 in 2024, up from $22,500 in 2023. The catch-up contribution amount for those age 50 and older will remain $7,500.
IRAs. The limit on annual contributions to traditional and Roth IRAs will increase to $7,000 in 2024, up from $6,500 in 2023. The extra catch-up contribution for those age 50 and older will remain $1,000.
Phase-out amounts for traditional IRAs. The deduction for taxpayers making contributions to a traditional IRA will phase out in 2024 for singles who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $77,000 and $87,000, up from $73,000 and $83,000 in 2023.
For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the 2024 income phase-out range will be $123,000 to $143,000, up from $116,000 to $136,000 in 2023.
For an IRA contributor who isn’t covered by a workplace retirement plan and is married to someone who is covered, the deduction will phase out in 2024 if the couple’s income is between $230,000 and $240,000, up from $218,000 and $228,000 in 2023. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range isn’t subject to an annual cost-of-living adjustment and remains $0 to $10,000.
Phase-out amounts for Roth IRAs. The 2024 AGI phase-out range for married couples filing jointly and making contributions to a Roth IRA will be $230,000 to $240,000, up from $218,000 to $228,000 in 2023.
For single taxpayers, the 2024 income phase-out range will be $146,000 to $161,000, up from $138,000 to $153,000 in 2023. For a married individual filing a separate return, the phase-out range isn’t subject to an annual cost-of-living adjustment and will remain $0 to $10,000.
The 2024 AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low and moderate-income workers will be $76,500 for married couples filing jointly, up from $73,000 in 2023. For heads of household, it will be $57,375, up from $54,750; and for married individuals filing separately and for singles, it will be $38,250, up from $36,500.
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 |
Please contact Richard Morris via our online contact form for more information.
Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.
