Pension contribution limits to increase in 2024

Good news for retirees: The Internal Revenue Service has announced that contribution limits for retirement plans will increase in 2024.

The annual contribution limits for 401(k) retirement funds increase from $18,500 to $19,000.

And the annual contribution to an IRA, last increased in 2013, will rise from $5,500 to $6,000.

“This is another win for investors and savers,” said Stephanie Bacak, a financial planner at Capstone Global Advisors. “There hasn’t been a cost of living increase in the IRA for so long, so it’s a great opportunity for many to be better prepared for retirement.”

Catch-up contributions, available to those age 50 and older, remain unchanged at $6,000 for 401(k) retirement plans and $1,000 for IRAs.

In addition to 401(k) plans, the limits for 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan are also increasing to $19,000.

The income levels that determine your eligibility to make deductible contributions to IRAs, Roth IRAs and claim the state savings tax credit also increase next year. Finzexpert

For example, the income phase-out range for taxpayers contributing to a Roth IRA increased to $137,000 for singles and heads of household, from $120,000 to $135,000. For married couples filing jointly, the income phase-out range is $193,000 to $203,000, from $189,000 to $199,000.

The IRS increases are helpful, says Shane Mason, a certified financial planner at Brooklyn FI, but only if you can make the maximum contribution.

He says people who want to max out their 401(k) retirement funds should review their contributions to make sure they’re putting in enough with each paycheck.

People who get paid twice a month (or 24 times a year) must contribute $792 per paycheck. People who get paid twice a week (every two weeks or 26 times a year) must contribute $731 per paycheck.