In a significant development that promises to bolster the saving capacity of many Americans, the Internal Revenue Service (IRS) has announced a hike in the maximum contribution limits for qualified retirement plans for the 2024 tax year. The revised contribution limits serve as a timely reminder for individuals to reassess their retirement goals and take advantage of the expanded opportunities to secure their financial future. Here are the details:
The maximum contributions allowed to qualified retirement plans have increased to $23,000 for 2024, up from $22,500 in 2023. This newly increased maximum limit applies to 401(k) and 403(b) plans as well.
Meanwhile, Individual Retirement Accounts (IRAs) will see a maximum contribution limit increase from the previous $6,500 to $7,000 in 2024.
However, the catch-up contributions for individuals aged 50 and above remain untouched. They stand at $7,500 for qualified retirement plans and $1,000 for IRAs.
Now, on to Roth IRA contributions. The adjusted gross income limitations to qualify for IRA contributions have increased to a phase-out range of $146,000 – $161,000 for single and head-of-household filers, and $230,000 – $240,000 for couples filing jointly. Married individuals filing separately was unchanged at $0 – $10,000.
It’s worth noting that while the majority of taxpayers qualify to contribute to an IRA, there are limits and phase-outs on deductibility based on income and retirement plan coverage, like those from a 401(k) or 403(b) plans. Those limits also increased for 2024 and are as follows:
| Filing Status and Retirement Plan Coverage | Deductibility Phase-Out Range |
|---|---|
|
$77,000 – $87,000 |
|
$123,000 – $143,000 |
|
$230,000 – $240,000 |
|
$0 – $10,000 |
The maximum qualified charitable distribution from retirement plans, which, beginning in 2024, will be indexed with inflation as part of the SECURE 2.0 Act, is $105,000 for 2024.
For additional information regarding these changes, please contact your local CBIZ professional
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