The IRS has updated the amount individuals can contribute to their employer-sponsored 401(k) plans in 2024 to $23,000, a $500 increase from the current contribution limit.
The $500 increase in the contribution limit applies to employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan.
The limit on annual contributions to an Individual Retirement Account (IRA) will also increase by $500 in 2024 to $7,000, up from $6,500 in 2023.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in these plans, as well as the U.S. government’s Thrift Savings Plan who are 50 and older can contribute up to $30,500 in 2024. The catch-up limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.
The IRA catch‑up contribution limit for individuals aged 50 and over was amended under a 2022 law to include an annual cost‑of‑living adjustment but remains $1,000 for 2024. This means the total IRA contribution limit for those 50 and older in 2024 is $8,000.
Along with contribution amounts, the IRS is also raising phase-out income thresholds that determine eligibility for a full or partial IRA tax deduction. The phase-out range increases to between $77,000 and $87,000 for single taxpayers; $123,000 to $143,000 for married couples filing jointly and $230,000 to $240,000 for IRA contributors who are not covered by a workplace retirement plan but is married to someone who is covered by a workplace retirement plan.
Technical guidance regarding all cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2024 can be found in IRS Notice 2023-75. –