One of the most anticipated moves by the Internal Revenue Service every year is the new limits on funding retirement accounts. The new contribution limits reflect cost-of-living increases over the last year.
The IRS recently announced that the contribution limits for 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan will increase to $23,000 in 2024, up from $22,500 in 2023.
The IRS also announced that contributions to IRAs will increase from $6,500 in 2023 to $7,000 in 2024. The IRA catch up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 to include an annual cost of living adjustment but remains $1,000 for 2024. Taxpayers can deduct contributions to a traditional IRA (not a Roth IRA) if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income.
