The Internal Revenue Service (IRS) has made an announcement that the contribution limits for retirement accounts, such as 401(k) plans, will be raised in 2024. There will be an increase to the annual contribution limits for most 457 plans, 401(ks), and 403(bs) by $500 to $23,000. Individuals aged 50 and older will be able to make additional catch-up contributions of up to $7,500, bringing the total limit to $30,500.
These contribution limits allow individuals to save more money for their retirement and can be especially beneficial for those who are trying to catch up on their savings later in their careers. Additionally, the IRS is increasing the phase-out income thresholds for IRA holders. For a single taxpayer with a workplace retirement plan, the phase-out range will be between $77,000 and $87,000, while for married couples filing jointly, the range will be between $123,000 and $143,000.
In terms of Roth IRA contributions, the cap for 2024 will be raised by $500 to $7,000. Unlike tax-deferred plans, Roth IRA contributions are taxed at the time of deposit but can be withdrawn tax-free after years of growth. The income phase-out ranges for Roth IRA contributors will also be expanded, allowing more individuals to participate.
The SIMPLE IRA, which is designed for small business employees and self-employed individuals, will see the contribution limit increase to $16,000 in 2024. Low- and moderate-income workers who qualify for the Saver’s Credit will also benefit from new income thresholds.
These changes in contribution limits provide individuals with more opportunities to save for retirement and meet their financial goals. It is important for individuals to review their retirement plans and consider how these new limits may affect their savings strategy. More information on the changes for 2024 can be found on the IRS website.