Soon, you can contribute a little more to your retirement account. The Internal Revenue Service adjusts the contribution limits for retirement accounts every year to reflect inflation and cost of living changes. These limits will be increasing this year.
Contribution limits for 401(k)s in 2024
The contribution limit for employer-sponsored plans, including 401(k), 457 and 403(b) retirement plans as well as Thrift Savings Plans (a type of account only available to federal employees and members of the military), will increase from $18,000 in 2024 to $23,000.
This is an increase of $500 from 2023. However, this is a much smaller increase than in previous years. In 2023, contribution limits for these accounts were increased by $2,000 The bump in 2022 was $1,000.
The catch-up contribution, which allows workers over 50 to save more for retirement, will remain at $7,500 per year in 2024. All new limits are set to take effect on Jan. 1, 2020.
IRA contribution limit 2024
Contributions to individual retirement accounts (IRAs) -- both Roth and traditional types -- will be capped at $7,000 in 2024, up from $6.500 in 2023. The maximum amount of catch-up contributions remains at $1,000.
Income levels for Roth IRAs and IRA contributions are changing.
As of next year, you will be able to earn up to $160,999 and still contribute towards a Roth IRA. Contributions are reduced starting at earnings below $146,000. The maximum income for married couples filing jointly is $240,000. Phase-outs begin at $230,000. The IRA contribution limits are determined by whether or not you have access to a retirement account at work.
You'll need to determine your contribution limit if you fall into one of the income categories that are phased out. This is calculated based on both your income and your tax filing status. You can use the IRS formula to calculate this amount (or consult a professional tax advisor to be sure).
For those with SIMPLE retirement plans, a type of IRA that is often used by small business, the contribution limits for 2024 will increase from $15,000 up to $16,000. The catch-up contribution on these accounts remains at $3,500.
Please include your full name, location and your answer may be published.