The IRS has just announced the new contribution and benefit limits for 2024 and—reflecting the moderating inflation readings, the increases are modest.
The headline is that next year the amount individuals can contribute to their 401(k) plans (not to mention 403(b) and most 457 plans, as well as the federal government’s Thrift Savings Plan) in 2024 has increased to $23,000, up from $22,500 for 2023.
That said, 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 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan who are 50 and older can contribute up to $30,500, starting in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.
The 2024 limits are contained in Notice 2023-75, released Nov. 1.
Additional Highlights for 2024
The limit on annual contributions to an IRA increased to $7,000 (up from $6,500), and while the IRA catch up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act (SECURE 2.0) to include an annual cost of living adjustment, it also holds steady at $1,000 for 2024.
Effective Jan. 1, 2024, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $265,000 to $275,000. The limitation for DC plans under section 415(c)(1)(A) is increased in 2024 from $66,000 to $69,000.
The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2024 are as follows:
- The limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3) is increased from $22,500 to $23,000.
- The annual compensation limit under sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $330,000 to $345,000.
- The dollar limitation under section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $215,000 to $220,000.
- The dollar amount under section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased from $1,330,000 to $1,380,000, while the dollar amount used to determine the lengthening of the 5-year distribution period is increased from $265,000 to $275,000.
- The limitation used in the definition of “highly compensated employee” under section 414(q)(1)(B) is increased from $150,000 to $155,000.
- The compensation amount under section 408(k)(2)(C) regarding simplified employee pensions remains $750.
- The limitation under section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $15,500 to $16,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $76,500 for married couples filing jointly, up from $73,000; $57,375 for heads of household, up from $54,750; and $38,250 for singles and married individuals filing separately, up from $36,500.
The amount individuals can contribute to their SIMPLE retirement accounts is increased to $16,000, up from $15,500.
Additional changes made under SECURE 2.0 are as follows:
- The limitation on premiums paid with respect to a qualifying longevity annuity contract to $200,000. For 2024, this limitation remains $200,000.
- Added an adjustment to the deductible limit on charitable distributions. For 2024, this limitation is increased to $105,000, up from $100,000.
- Added a deductible limit for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity. For 2024, this limitation is increased to $53,000, up from $50,000.
Details on these and other retirement-related cost-of-living adjustments for 2024 are in Notice 2023-75, available on IRS.gov.
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