The Internal Revenue Service has boosted the amount individuals can contribute to their 401(k) retirement plans next year by $500 to $23,000.
The increase is much less than the $2,000 hike that savers saw this year. That increase was the biggest dollar increase since 2007 and came amid growing concerns about high inflation.
The new contribution limit, which reflects the cost of living, also applies to employees who participate in 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan. The limit on IRA catch-up contributions for employees aged 50 and over who participate in these plans will be increased from $6,500 to $7,000, the IRS said.
The changes mean that retirement savers who are 50 or older can save up to $30,500 next year in their 401(k), 403(b), and most 457 plans as well as the federal government’s Thrift Savings Plan.
The catch-up contribution limit for employees 50 and over who participate in SIMPLE or Savings Incentive Match Plan for Employees remains $3,500 for 2024.
The IRS has also increased income limits for Roth IRA contributions for 2024. The income phase-out range for singles and head of household taxpayers making contributions to a Roth IRA has increased to between $146,000 and $161,000, up from between $138,000 and $153,000. For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000. And the phase-out range for married individuals filing separately remains at $0 to $10,000.
Also increasing is the income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers. For married couples filing jointly the limit goes to $76,500, up from $73,000; for heads of household, it jumps to $57,375 from $54,750; and for singles and married individuals filing separately it goes to $38,250 from $36,500.
