IRS Announces 2024 Limits and Adjustments for Retirement Plans

The Internal Revenue Service (IRS) has recently revealed updates to contribution limits for various retirement plans, impacting both employer-sponsored plans and individual retirement accounts (IRAs).

Employee Contribution Limits for Tax-Advantaged Employer Retirement Plans

In 2024, the IRS raises contribution limits for 401(k)s, 403(b)s, most 457 plans, and Thrift Savings Plans (TSPs) by $500, now at $23,000, up from $22,500 in 2023. The catch-up contribution limit for employees aged 50 and older remains at $7,500, for a total annual contribution of $30,500.

Individual Retirement Accounts (IRAs) Updates

The contribution limits for IRAs, traditional or Roth, have been revised. In 2024, individuals can contribute up to $7,000 annually, a $500 increase from 2023. Those aged 50 and older can contribute an extra $1,000 for a total of $8,000 as a catch-up contribution, aiding individuals in building retirement wealth as they approach retirement age.

Roth IRA Income Qualifications and Other Adjustments

Income qualifications for contributing to a Roth IRA have expanded. The adjusted gross income phaseout range for single individuals and heads of households now spans $146,000 to $161,000 in 2024, compared to $138,000 to $153,000 in 2023.

In conclusion, the IRS's announcement brings positive news for retirement planning. With higher contribution limits and expanded eligibility criteria, individuals now have increased flexibility and opportunities to bolster their retirement savings. As these adjustments take effect in 2024, individuals are encouraged to review and update their retirement strategies to capitalize on these changes for a more financially stable future.