IRS Announces IRA and Plan Limits for 2024
The IRS issued Notice 2023-75 in which they provide retirement plan limits for 2024. Only some of the limits were changed from those that were in effect for 2023. The following are the highlights.
Traditional IRA Deductibility
Individuals who are active participants are eligible to deduct their Traditional IRA contributions, only if their modified adjusted gross income (MAGI) amounts do not exceed certain limits. For details on how this works, see the article Active Participant Status–Can You Deduct Your IRA Contribution?
The MAGI limits that apply to each tax-filing status are as follows:
|2024 MAGI limits for deducting contributions to Traditional IRAs|
|Tax Filing Status||MAGI||Allowed deduction|
|a. Single individuals and heads of household who are active participants in a qualified plan/employer plan||$77,000 or less||100%|
|$77,000 to $87,000||Partial|
|$87,000 or more||None|
|b. Married couples filing jointly if the spouse who makes the IRA contribution is an active participant||$123,000 or less||100%|
|$123,000 to $143,000||Partial|
|$143,000 or more||None|
|c. IRA contributor who is not an active participant and is married to someone who is an active participant,||$230,000 or less||100%|
|$230,000 to $240,000||Partial|
|$240,000 or more||None|
|d. a married individual filing a separate return who is an active participant||Less than $10,000||Partial|
|$10,000 or more||None|
Roth IRA Contribution Eligibility Limits
Individuals may contribute to a Roth IRA only if their MAGIs do not exceed a certain amount. The limits are as follows:
|2024 MAGI limits for contributing to a Roth IRA|
|Tax Filing Status||MAGI||Allowed contribution|
|a. All taxpayers other b. or c. below||$146,000 or less||100%|
|$146,000 to $161,000||Partial|
|$161,000 or more||None|
|b. Married taxpayers filing a joint return or taxpayers filing as a qualifying widow(er)||$230,000 or less||100%|
|$230,000 to $240,000||Partial|
|$240,000 or more||None|
|c. Married individual filing a separate return||Less than $10,000||Partial|
|$10,000 or more||None|
For more on Roth and Traditional IRAs, see the article Traditional or Roth IRA Contribution- Making The Choice.
A nonrefundable savers tax credit is available to eligible individuals who make contributions to their Traditional IRAs and/or Roth IRAs, as well as to those who make salary deferral contributions to an employer sponsored retirement plan. This saver’s credit is capped at $1,000, and the percentage for which the individual is eligible depends on his/her adjusted gross income (AGI). For an explanation of the saver’s credit and how it works, see The Saver’s Credit- an Often Overlooked Retirement Savings Benefit:
The following are the AGI limits and the credit rate percentage for which individuals are eligible.
|2024 AGI limits for eligibility for savers credit: salary deferral and IRA/Roth IRA contributions|
|Married and files a joint return||Files as head of household||
Other category of filers
|Over||Not Over||Over||Not Over||Over||Not Over|
The following IRA and employer plan limits were also announced.
IRA Contribution Limit for Traditional and Roth IRA
$7,000: The maximum amount that an individual can contribute to an IRA for the year is 100% of eligible compensation or $7,000, whichever is less. This can be contributed to either a Traditional IRA or a Roth IRA, or split between both. The aggregate amount cannot exceed $7,000.
Catch-up Contribution Limit for Traditional and Roth IRAs
$1,000: Individuals who are at least age 50 by the end of the year can make an additional IRA contribution of $1,000. This is referred to as a catch-up contribution. The $1,000 can be a contribution to a Traditional IRA or Roth IRA, or split between both. The aggregate amount cannot exceed $1,000.
Salary deferral contributions to plans such as 401(k), federal thrift savings (TSP), or 403(b) plan.
$23,000: Maximum amount of salary deferral contributions that can be made by an individual for the year. This is a ‘per individual’ limit. Therefore, regardless of the number of 401(k), thrift savings plan, SIMPLE IRA, SIMPLE 401(k) or 403(b) plans in which the individual participates, the aggregate salary deferral contributions for the year cannot exceed $23,000 + catch-up contributions.
Salary deferral contributions to 457(b) plans
$23,000: Maximum amount of salary deferral contribution that can be made to a 457(b) plan. If someone participates in a 457(b) plan and also participates in a 403(b) plan [for example], he/she could make salary deferral contributions of up to $23,000 to each + catch-up.
SIMPLE IRA Salary deferral
$16,000: Maximum amount of salary deferral contributions that can be made to a SIMPLE IRA for the year
SIMPLE 401(k) Salary deferral
$16,000: Maximum amount of salary deferral contributions that can be made to a SIMPLE 401(k) for the year
Catch-up contributions to 401(k) and 403(b) plans
$7,500: Maximum amount of catch-up contributions that can be made for the year. This does not include catch-up contributions made to 457(b) plans
Catch-up contributions to 457(b) plans
$7,500: Maximum amount of catch-up contributions that can be made to a 457(b) plan.
Catch-up contribution limit for SIMPLE IRAs
$3,500: Maximum amount of catch-up contributions that can be made to a SIMPLE IRA for the year
Catch-up contribution limit for SIMPLE 401(k) plans
$3,500: Maximum amount of catch-up contributions that can be made to a SIMPLE 401(k) for the year
$69,000: Maximum dollar amount that can be added to a participant’s account for the year. This applies on a per-employer basis. Therefore, if an individual works for two separate employers, that individual could receive $69,000 to each plan + catch-up. For this to be possible, the employers must not be part of a controlled group or affiliated service group.
$275,000: Maximum benefit payable annually in the form of a straight life annuity under a defined benefit plan
$345,000: The maximum amount of compensation that can be taken into account when computing plan contributions and benefits. For SIMPLE IRAs, this cap applies only to non-elective contributions.
Minimum SEP compensation
$750: Employees who earn at least $750 must share in SEP contributions for the year, providing they meet the other eligibility requirements
Dollar limitation for defining a key employee
$220,000: A plan is considered to be top-heavy if more than 60% of assets under the plan are owned by key-employees
Dollar limitation for defining highly compensated employee (HCE)
$155,000: Nondiscrimination testing is required to be performed for qualified plans to ensure benefits are not discriminately skewed in favor of highly compensated employees
Maximum account balance in an ESOP under Section 409(o)(1)(C)(ii)
$1,380,000: The dollar amount for determining the maximum account balance in an ESOP subject to a 5-year distribution period
Maximum dollar amount in an ESOP under Section 409(o)(1)(C)(ii)
$275,000: The dollar amount under Section 409(o)(1)(C)(ii) used to determine the lengthening of the 5-year distribution in an ESOP
Annual compensation limit under Section 401(a)(17) for eligible participants in certain governmental plans
$505,000: The annual compensation limitation for eligible participants in certain grandfathered governmental plans remains unchanged
Qualified Charitable Distributions
The aggregate amount of qualified charitable distributions that are not includible in gross income under section 408(d)(8)(A) is increased from $100,000 to $105,000. The amount of qualified charitable distributions made directly to a split-interest entity that are not includible in gross income under section 408(d)(8)(F)pursuant to a one-time election is increased from $50,000 to $53,000.
Qualified Longevity Annuity Contract
The dollar limitation on premiums paid for a qualifying longevity annuity contract, which was increased to $200,000 under SECURE 2.0 Act of 2022 to contracts purchased or received in an exchange on or after December 29, 2022 remains $200,000.
For Social Security Changes, click https://www.ssa.gov/cola/