Catch up! IRS announces 401(k) contribution limits for 2024

Retirement savers will be able to put away an additional $500 in 2024.

The Internal Revenue Service announced Wednesday it will increase the individual 401(k) contribution limit to $23,000 from a limit of $22,500 in 2023, in line with expectations. At 2.22%, the increase is smaller than last year’s record-breaking increase of 9.8%.

The increase applies to participants in 401(k), 403(b) and most 457 plans as well as the federal government’s Thrift Savings Plan.

The IRA also increased the limit on contributions to individual retirement accounts by $500 to $7,000 for 2024 but held the IRA catch-up contribution limit for individuals over age 50 to $1,000. Similarly, the 401(k), 403(b) and 457 catch-up contribution limit for employees over 50 remains unchanged at $7,500.

The amount individuals can contribute to SIMPLE retirement accounts increases to $16,000 from $15,500.

The income ranges for determining eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2024.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions, the IRS said. If during the year either the taxpayer or the taxpayer’s spouse is covered by a workplace retirement plan, the deduction may be reduced or phased out until it is eliminated, depending on filing status and income.

The phase‑out ranges for 2024 are:

• $77,000 to $87,000 for single taxpayers covered by a workplace retirement plan, up from between $73,000 and $83,000.
• $123,000 to $143,000 for married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, up from between $116,000 and $136,000.
• $230,000 to $24,000 for IRA contributors not covered by a workplace retirement plan and married to someone who is covered, up from between $218,000 and $228,000.
• $0 to $10,000 for a married individual filing a separate return who is covered by a workplace retirement plan, unchanged from 2023.
• $146,000 to $161,000 for single and head-of-household taxpayers making contributions to a Roth IRA, up from between $138,000 and $153,000.
• $230,000 to $240,000 for married couples filing jointly, up from between $218,000 and $228,000.
• $0 to $10,000 for a married individual filing a separate return who makes contributions to a Roth IRA, unchanged from 2023.

Additional changes made under SECURE 2.0 include:

• The limitation on premiums paid with respect to a qualifying longevity annuity contract remains $200,000 for 2024.
• The limitation on charitable distribution deductibles will increase to $105,000 from $100,000.
• The deductible limit for a one-time election to treat a distribution from an IRA made directly by the trustee to a split-interest entity will increase to $53,000 from $50,000.

In August, the IRS announced an administrative transition period that extends until 2026 the new SECURE 2.0 requirement that any catch-up contributions made by higher-income participants in 401(k) and similar retirement plans must be designated as after-tax Roth contributions. The agency also clarified that plan participants who are age 50 or older can continue to make catch- up contributions after 2023, regardless of income.

Related: 401(k) contribution limit projections for 2024: What plan sponsors may expect from the IRS

Details on these and other retirement-related cost-of-living adjustments for 2024 are in Notice 2023-75.

The IRS also issued technical guidance about cost-of-living adjustments affecting dollar limitations for plans and other retirement-related items for tax year 2024. These include an increase in the limitation on the annual benefit under certain defined benefit plans to $275,000.