2024 Inflation Adjustments for Pension Plans & Retirement Accounts Released

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
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