IRS bumps up caps for retirement savings contributions

By Steve Dinnen

Hot off the press: The IRS on Wednesday raised the amount that Americans can set aside for retirement in their 401(k) and other tax-deferred plans next year.

Beginning in 2024, workers will be able to contribute up to $23,000 to their 401(k) accounts. That’s an increase of $500 from this year. The increase applies to other retirement savings accounts, as well, including 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan.

Catch-up contributions for savers age 50 and older remain unchanged at $7,500.

The IRS also lifted the contribution maximums for IRAs, bumping the limit to $7,000 for 2024, up from $6,500 in 2022. The catch-up contribution amount for IRAs stays at $1,000.

Now, to Roth accounts: The newest income phase-out from the IRS will rise to $161,000 for individuals and heads of households, up from $153,000 in 2023. The phase-out will climb to $240,000 for married couples who file jointly, up from the previous cap of $228,000.

According to a 2022 Vanguard report, average balances for retirement were $141,542. So if you can kick in that catch-up amount, go for it. One in four Americans has no retirement savings at all, so if you can start to save, do so. And start today.

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