IRS Releases 2024 Cost-of-Living Adjusted Retirement Savings Limitations

The IRS has issued Notice 2023-75, which contains the 2024 cost-of-living increases for qualified retirement plan dollar limitations on benefits and contributions under the Internal Revenue Code (IRC).

• Annual additions under IRC Section (Sec.) 415(c)(1)(A) for defined contribution plans: $69,000 ($66,000 for 2023)
• Annual benefits under IRC Sec. 415(b)(1)(A) for defined benefit plans: $275,000 ($265,000 for 2023)
• Annual deferral limit (402(g) limit) for 401(k), 403(b), and 457(b) plans: $23,000 ($22,500 for 2023)
• Catch-up contributions to 401(k), 403(b), and 457(b) plans: $7,500 ($7,500 for 2023)
• Annual deferral limit for SIMPLE IRA and SIMPLE 401(k) plans: $16,000 ($15,500 for 2023)
• Catch-up contributions for SIMPLE IRA and SIMPLE 401(k) plans: $3,500 ($3,500 for 2023)
• IRC Sec. 401(a)(17) compensation cap: $345,000 ($330,000 for 2023)
• Highly compensated employee (HCE) definition income threshold: $155,000 ($150,000 for 2023)
• Top-heavy determination key employee definition income threshold: $220,000 ($215,000 for 2023)
• SEP plan employee income threshold for benefit eligibility: $750 ($750 for 2023)
• Taxable wage base (TWB) increases to $168,600 for 2024 from $160,200; used in some integrated allocation formulas
• Qualifying longevity annuity contract (QLAC) amount excludible from required minimum distribution determinations was increased to $200,000 pursuant to the SECURE 2.0 Act with respect to contracts purchased or received in an exchange on or after December 29, 2022, and remains $200,000

IRA Contribution and Taxpayer Contribution Credit Amounts

Annual limitations for IRA contributions, deductibility for those who are active participants in employer plans, and those seeking an income tax credit for retirement saving contributions, have slightly different indices that are used for determining cost-of-living adjustments (COLAs) in employer plans. The limitations for 2023 are as follows.

• Traditional and Roth IRA contributions: $7,000 ($6,500 for 2023)
• Traditional and Roth IRA catch-up contributions: $1,000 ($1,000 for 2023)
• IRA deductibility phase-out for single taxpayers participating in employer plans rises to $77,000 - $87,000 (was $73,000 - $83,000)
• IRA deductibility phase-out for married joint filing taxpayers participating in employer plans rises to $123,000 - $143,000 (was $116,000 - $136,000)
• IRA deductibility phase-out for married with spouse an active participant in an employer plan rises to $230,000 - $240,000 (was $218,000 - $228,000)
• Roth IRA income limitations for determining maximum contribution for married joint filers: phase-out range rises to $230,00 - $240,000 (was $218,000 - $228,000)
• Roth IRA income limitation for determining maximum contribution for single filers and heads-of-households: phase-out range rises to $146,000 – $161,000 (was $138,000 - $153,000)

Taxpayers who make contributions to IRAs or deferral-type employer-sponsored retirement plans of up to $2,000 may be eligible for a special income tax credit (the “saver’s credit”) of 10, 20, or 50 percent of the amount contributed, depending on their income.

For joint filers, the maximum adjusted gross income level for

• the 50 percent tax credit is $46,000;
• the 20 percent tax credit is $50,000; and
• the 10 percent tax credit is $76,500.

For head of household filing status, the maximum adjusted gross income level for

• the 50 percent tax credit is $34,500;
• the 20 percent tax credit is $37,500; and
• the 10 percent tax credit is $57,375.

For all other filing statuses, the maximum adjusted gross income level for

• the 50 percent tax credit is $23,000;
• the 20 percent tax credit is $25,000; and
• the 10 percent tax credit is $38,250.