Many savers hoping to be able to sock away more money in retirement accounts in 2024 than they could in 2023 are in luck.
Most contribution limits for tax-advantaged retirement accounts are subject to inflation adjustments, also known as cost-of-living adjustments. And for the 2024 tax year, the IRS has announced that these limits will jump for six different types of retirement accounts — five types of workplace plans plus IRAs.
Additionally, income limits for IRAs are rising. The limit for what are known as qualified charitable contributions (QCDs) also will rise — for the first time, thanks to a recent change to federal law.
All of these changes will affect your tax return that is due by April 2025.
Base contribution limits for 5 workplace plans rise
For 2024, the base contribution limit for the following types of workplace retirement accounts is rising from $22,500 to $23,000:
- 401(k) plans
- 403(b) plans
- Most 457 plans
- Thrift Savings Plan
Additionally, the base contribution limit for Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts is rising from $15,500 to $16,000.
Catch-up contribution limits for workplace plans unchanged
Each year, folks who are 50 or older can save more money in their tax-advantaged retirement accounts by also making extra contributions, known as “catch-up contributions.”
For 2024, the catch-up contribution limit for the following types of workplace retirement accounts will remain the same as it was for 2023 — $7,500:
- Most 457 plans
- Thrift Savings Plan
This means that someone who is at least 50 years old can contribute $23,000 plus $7,500 to those types of accounts — for a total of $30,500 — in 2024.
The catch-up contribution limit for SIMPLE retirement accounts also remains the same — $3,500.
Base contribution limit for IRAs rises
For 2024, the base contribution limit for individual retirement accounts (IRAs) is rising from $6,500 to $7,000. This change applies to both Roth and traditional IRAs.
Catch-up contribution limit for IRAs unchanged
For 2024, the catch-up contribution limit for Roth and traditional IRAs remains the same — $1,000.
This limit has been static for years, as it was not subject to cost-of-living adjustments, unlike the catch-up limits for various other types of retirement accounts.
A federal law known as the Secure 2.0 Act of 2022 changed that by indexing the IRA catch-up limit to inflation, but that limit will not change for 2024.
Income limits for Roth IRAs rise
Income limits for Roth IRAs determine whether you’re eligible to contribute to such an account at all.
For 2024, the income phase-out ranges for Roth IRA contributions will be as follows:
- Single tax-filing status: Adjusted gross income (AGI) of $146,000 to $161,000 — up from $138,000 to $153,000
- Head of household tax-filing status: $146,000 to $161,000 — up from $138,000 to $153,000
- Married couple filing a joint return: $230,000 to $240,000 — up from $218,000 to $228,000
- Married individual filing a separate return: $0 to $10,000 — unchanged (because it is not subject to cost-of-living adjustments)
This means that, for example, a single taxpayer with an AGI of less than $146,000 in 2024 can contribute to a Roth IRA up to the full limit — $7,000 or $8,000, depending on the taxpayer’s age. But a single taxpayer with an AGI of $146,000 to $161,000 can contribute only a reduced amount. A single taxpayer with an AGI of more than $161,000 cannot contribute to a Roth IRA at all.
Income limits for traditional IRAs rise
Income limits for traditional IRAs determine whether you can make tax-deductible contributions to such an account.
These limits depend not only on your tax-filing status and income but also on whether you or your spouse is covered by a workplace retirement account. For specifics, see the first set of bullet points in the IRS’ announcement about 2024 limits.
Limit for QCDs rises
Qualified charitable distributions (QCDs) are basically tax-deductible donations made directly from a retirement account to a charity.
Previously, QCDs were capped at $100,000 per year and not indexed to inflation, so the cap was stuck at $100,000 for years. The Secure 2.0 Act of 2022 changed that, however, by creating a cost-of-living adjustment for QCDs starting in 2024. As a result, the QCD limit will rise to $105,000 for the 2024 tax year.