By Sarah Brenner, JD
Director of Retirement Education
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The IRS has released cost-of-living adjustments (COLAs) for 2024. Many IRA limits will increase next year.
Higher IRA Contributions
The limit on annual contributions to an IRA is increased to $7,000 for 2024, up from $6,500 in 2023. The IRA catch up contribution limit for individuals aged 50 and over was changed to now include a COLA under the SECURE 2.0 but remains $1,000 for 2024. This would allow an individual who is age 50 or older in 2024 to contribute $8.000 to an IRA.
New SECURE 2.0 COLAs
Some new additional COLAs for IRAs for 2024 made under SECURE 2.0 are as follows:
- The limitation on contributions to qualifying longevity annuity contracts (QLACs) was raised by SECURE 2.0 to $200,000. For 2024, this limit remains $200,000.
- For the first time qualified charitable distributions (QCDs) are indexed for inflation. For 2024, the QCD limit is increased to $105,000, up from $100,000 in 2023.
- The limit for a one-time QCD from an IRA to a split-interest entity is increased to $53,000 for 2024, up from $50,000 for 2023.
Other IRA COLAs
The income ranges for determining eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2024.
The deduction for taxpayers making contributions to a traditional IRA is phased out for single individuals who are active participants in an employer plan and have adjusted gross incomes between $77,000 and $87,000, increased from between $73,000 and $83,000. For married couples filing jointly, if the spouse who makes the IRA contribution is an active participant, the income phase-out range is between $123,000 and $143,000, increased from between $116,000 and $136,000. For an individual who is not an active participant but is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $230,000 and $240,000, increased from between $218,000 and $228,000.
The income phase-out range for individuals making contributions to a Roth IRA is increased to between $146,000 and $161,000 for single filers, up from between $138,000 and $153,000. For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000.
The income limit for the Saver’s Credit is $76,500 for married couples filing jointly, up from $73,000; and $38,250 for singles and married individuals filing separately, up from $36,500.
The SEP contribution limit for 2024 is 25% of up to $345,000 of compensation, limited to a maximum annual contribution of $69,000.
The maximum SIMPLE IRA elective deferral is increased to $16,000 in 2024, up from $15,500 in 2023. The catch-up contribution limit for SIMPLE IRAs remains at $3,500.
More information on these and other COLAs for retirement accounts for 2024 can be found in Notice 2023-75.