Rosalind Evans
The Internal Revenue Service (IRS) has announced significant changes to retirement contribution limits for 2024 to help individuals save more for their retirement amidst rising living costs. In a recent statement, the IRS disclosed that the annual individual contribution limits for 401(k), 403(b), most 457 plans, and the government’s Thrift Savings Plan will be increased by $500, bringing the limit to $23,000. This adjustment will enable employees to allocate more tax-deferred dollars into their retirement accounts, ultimately reducing their taxable income.
The IRS also declared that people aged 50 or older would be eligible to contribute an additional $7,500 to these plans as part of the catch-up contribution program, setting the limit at $30,500 for 2024. Similarly, IRA contributors can invest up to $7,000, up from the previous limit of $6,500, with the catch-up contribution limit for those 50 or older fixed at $8,000. The phase-out income thresholds for IRA holders have been raised as well. Single taxpayers covered by a workplace retirement plan will now have a phase-out range of between $77,000 and $87,000, an increase from $73,000 to $83,000. For married couples filing jointly, the range is increased to between $123,000 and $143,000, up from between $116,000 and $136,000.
Moreover, the IRS announced changes to Roth IRA contributions. The cap for 2024 Roth contributions has been raised by $500, from $6,500 to $7,000, and the income phase-out ranges for Roth IRA contributions have also been made more inclusive. For taxpayers contributing to a Roth IRA, the range goes up to between $146,000 and $161,000 for singles and heads of household, a $8,000 increase. For married couples filing jointly, the range is increased to between $230,000 and $240,000, a $12,000 jump.
The SIMPLE IRA, designed for small-business employees and self-employed individuals, will increase contribution limits from $15,500 to $16,000. Additionally, the Saver’s Credit income thresholds for low- and moderate-income workers have been revised, with new limits set at $76,500 for married couples filing jointly, $57,375 for heads of household, and $38,250 for singles and married individuals filing separately.
The IRS’s decision to increase the retirement contribution limits for 2024 is a welcome move that will undoubtedly assist many individuals in meeting their retirement goals, particularly those looking to “catch up” later in their careers. As the cost of living continues to rise, having the opportunity to save more for retirement is crucial, and these new limits will undoubtedly help to alleviate some of the financial pressures faced by those nearing retirement age.
