The 2024 cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS. In general, many of the pension plan limitations will change for 2023 because the increase in the cost-of-living index due to inflation met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged. The SECURE 2.0 Act made some retirement-related amounts adjustable for inflation beginning in 2024, including:
- The catch up contribution amount for IRA owners 50 or older remains $1,000.
- The amount of qualified charitable distributions from IRAs that are not includible in gross income is increased from $100,000 to $105,000.
- The limit on one-time qualified charitable distributions made directly to a split-interest entity is increased from $50,000 to $53,000.
- The dollar limit on premiums paid for a qualifying longevity annuity contract (QLAC) remains $200,000.
Highlights of Changes for 2024
The contribution limit has increased from $22,500 to $23,000 for employees who take part in a:
- 401(k)
- 403(b)
- most 457 plans
- the federal government’s Thrift Savings Plan
The annual limit on contributions to an IRA increased from $6,500 to $7,000.
The catch-up contribution limit for individuals 50 and older is subject to an annual cost-of-living adjustment beginning in 2024, but remains $1,000.
Phase-Out Ranges
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. The deduction phases out if the taxpayer or their spouse takes part in a retirement plan at work. The phase out depends on the taxpayer’s filing status and income.
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $77,000 to $87,000, up from between $73,000 and $83,000.
- For joint filers, when the spouse making the contribution takes part in a workplace retirement plan, the phase-out range is $123,000 to $143,000, up from between $116,000 and $136,000.
- For an IRA contributor who is not covered by a workplace retirement plan but their spouse is, the phase out is between $230,000 and $240,000, up from between $218,000 and $228,000.
- For a married individual covered by a workplace plan filing a separate return, the phase-out range remains between $0 and $10,000.
The phase-out ranges for Roth IRA contributions are:
- -$146,000 and $161,000, for singles and heads of household
- -$230,000 and $240,000, for joint filers
- -$0 to $10,000 for married separate filers
Finally, the income limit for the Saver’ Credit is:
- 76,500 for joint filers,
- $57,375 for heads of household
- $38,250 for singles and married separate filers