Retirement Plan Limits & Federal Tax-Bracket Changes for 2024

By Gavin L. DiStasi | December 28, 2023

As we wrap up another year, it is time, once again, to turn our thoughts to taxes and tax-planning for the coming year.  While nobody really likes thinking about, or dealing with (and certainly not paying) taxes, we will once again see increases in contribution limits and income tax brackets pretty much across the board in the coming year.  As always, we hope to help turn the unpleasant business of paying taxes in our favor by understanding and taking advantage of these new increased limits.

Traditional IRA –

The maximum contribution to a Traditional IRA for 2024 is:

  • $7,000 for anyone under age 50. (Up from $6,500 in 2023.)
  • $8,000 for anyone age 50 or older. (Up from $7,500 in 2023.)

While anyone can contribute to a Traditional IRA, not everyone is eligible to deduct this contribution on their tax return.  If neither you, nor your spouse/partner (if you have one), were eligible for a work-related retirement plan, regardless of whether you actually invested in this plan, there is no income limit to make a deductible Traditional IRA contribution.  All contributions, up to the annual limit, to a Traditional IRA, will be eligible for a tax-deduction.

In order to qualify for a tax-deduction, based on your Traditional IRA contribution in 2024, if you are covered by a workplace retirement plan and you file your taxes as single, or as head of household, your Modified Adjusted Gross Income (MAGI) in 2024 must be:

  • Below $77,000 – you are eligible to make a fully-deductible contribution. 
  • Between $77,000 – $87,000 – you are eligible to make a partially-deductible contribution.
  • Above $87,000 – you are not eligible to make a deductible contribution.

In order to qualify for a tax-deduction, based on your Traditional IRA contribution in 2024, if you and/or your spouse/partner are covered by a workplace retirement plan and you file your taxes as married filing jointly, or as qualifying widow(er), your Modified Adjusted Gross Income (MAGI) in 2024 must be:

  • Below $123,000 – you are eligible to make a fully-deductible contribution. 
  • Between $123,000 – $143,000 – you are eligible to make a partially-deductible contribution.
  • Above $143,000 – you are not eligible to make a deductible contribution.

Roth IRA –

The maximum contribution to a Roth IRA for 2024 is:

  • $7,000 for anyone under age 50. (Up from $6,500 in 2023.)
  • $8,000 for anyone age 50 or older. (Up from $7,500 in 2023.)

In order to qualify to make a Roth IRA contribution in 2024, if you file your taxes as single, or as head of household, your Modified Adjusted Gross Income (MAGI) in 2024 must be:

  • Below $146,000 – you are eligible to make a full contribution. 
  • Between $146,000 – $161,000 – you are eligible to make a partial contribution.
  • Above $161,000 – you are not eligible to contribute.

In order to qualify to make a Roth IRA contribution in 2024, if you file your taxes as married filing jointly or as qualifying widow(er), your Modified Adjusted Gross Income (MAGI) in 2024 must be:

  • Below $230,000 – you are eligible to make a full contribution. 
  • Between $230,000 – $240,000 – you are eligible to make a partial contribution.
  • Above $240,000 – you are not eligible to contribute.

401(k) & 403(b) Plan –

The maximum elective deferral limit for employees into a 401(k) or 403(b) plan for 2024 is:

  • $23,000 for anyone under age 50. (Up from $22,500 in 2023.)
  • $30,500 for anyone age 50 or older. (Up from $30,000 in 2023.)

The maximum total contribution/deferral limit (elective deferrals + employer matching contributions + employer non-elective contributions) into a 401(k) or 403(b) plan for 2024 is:

  • $69,000 for anyone under age 50. (Up from $66,000 in 2023.)
  • $76,500 for anyone age 50 or older. (Up from $73,500 in 2023.)

Simplified Employee Pension (SEP IRA) –

The maximum contribution to a SEP IRA for 2024 is the lesser of:

  • $25% of the employee’s compensation, or
  • $69,000 (Up from $66,000 in 2023.)

Savings Incentive Match Plans for Employees (SIMPLE IRA) –

The maximum elective deferral limit for employees into a SIMPLE IRA plan for 2024 is:

  • $16,000 for anyone under age 50. (Up from $15,500 in 2023.)
  • $19,500 for anyone age 50 or older. (Up from $19,000 in 2023.)

Federal Tax Brackets –

If you file your taxes as single, the tax brackets for 2024 are:

  • 10% on taxable income up to $11,600
  • 12% on taxable income between $11,601 – $47,150
  • 22% on taxable income between $47,151 – $100,525
  • 24% on taxable income between $100,526 – $191,950
  • 32% on taxable income between $191,951 – $243,725
  • 35% on taxable income between $243,726 – $578,125
  • 37% on taxable income over $609,350

If you file your taxes as married filing jointly, the tax brackets for 2024 are:

  • 10% on taxable income up to $23,200
  • 12% on taxable income between $23,201 – $94,300
  • 22% on taxable income between $94,301 – $201,050
  • 24% on taxable income between $201,051 – $383,900
  • 32% on taxable income between $383,901 – $487,450
  • 35% on taxable income between $487,451 – $731,200
  • 37% on taxable income over $731,201

Now that you have the knowledge, all that’s left to do is to use it to your advantage.  One of the best ways to save on your current tax bill, and to prepare for a long, active and fulfilling retirement, is to contribute regularly to retirement plans.  Even if you cannot afford to max-out the plans as described above, every bit counts, so do the best you can and take advantage of the silver lining of increased contribution limits that our current economic environment has provided for us.

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