Retirement plan contribution limits are reviewed each year and are occasionally adjusted by the IRS. Table 1 below summarizes retirement plan contribution limits for 2024.
Table 1: Retirement Plan Contribution Limits (2024)
|
Retirement Plan Type |
2024 Contribution Limit |
Age 50+ Catch-up Contribution Limit |
|
Individual Retirement Account (IRA) |
$7,000 |
$1,000 |
|
Simple IRA |
$16,000 |
$3,500 |
|
SEP |
25% of net earnings, up to $69,000 |
$7,500 |
|
Employer-sponsored defined contribution plans (401(k)s, 403(b)s, profit-sharing plans, etc.) |
$23,000 (elective deferral limit) $69,000 (total limit: employee and employer contributions) |
$7,500 |
A taxpayer’s adjusted gross income (AGI) affects how much they can contribute annually to a Roth IRA. An individual can contribute up to the contribution limit so long as their AGI is below the phase-out range. A reduced contribution amount is allowed if a taxpayer’s AGI is within the phase-out range. If the taxpayer’s AGI is above the phase-out range, no Roth IRA contribution is allowed. The income phase-out range for taxpayers making Roth IRA contributions has also been adjusted. Table 2 below shows the phase-out ranges for various tax filing statuses.
Table 2: Roth IRA AGI Phase-Out Ranges
|
Tax Filing Status |
AGI Phase-Out Range |
|
Single |
$146,000 to $161,000 |
|
Married filing jointly |
$230,000 to $240,000 |
|
Married filing separately and lived with spouse any time during the year |
$0 to $10,000 |
|
Head of Household or Married filing separately and did not live with spouse |
$146,000 to $161,000 |
(https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000)
AGI limits also apply to the deductibility of contributions to a traditional IRA when either the taxpayer or their spouse participates in a company-sponsored retirement plan. Table 3 below shows the phase-out ranges for traditional IRA deductions.
Table 3: Traditional IRA Deduction Phase-Out Ranges
|
Tax Filing Status |
AGI Phase-Out Range |
|
Single, covered by workplace retirement plan |
$77,000 to $87,000 |
|
Married filing jointly, covered by workplace retirement plan |
$123,000 to $143,000 |
|
Married filing jointly, spouse covered by workplace retirement plan |
$230,000 to $240,000 |
|
Married filing separately, covered by workplace retirement plan |
$0 to $10,000 |
Editors’ Note: This article was originally published in January of 2021. It has been updated to reflect 2024 information.
Alyssa Dalbey is a Wealth Manager with Schultz Financial Group Inc.
Schultz Financial Group Inc. (SFG) is a wealth management firm located in Reno, NV. Our approach to wealth management is different from many other wealth managers, financial advisors, and financial planners. Our team of fee-only fiduciaries strives to help our clients build their wealth across four capitals: Financial Matters, Physical Well-being, Psychological Space, and Intellectual Engagement. We provide family office and wealth management services to clients located in Nevada, California, and other states. If you’d like more information, please check out our website or reach out to us via our contact page.