Workers can contribute up to $23,000 annually to their $401(k) plans in 2024, the IRS announced at the top of the month, a $500 increase from the previous limit of $22,500.
The new contribution limit also applies to 403(b) plans and some 457 plans as well. This jump is incremental compared to the $2,000 increase between 2022 and 2023.
The 401(k) plan changes affect all salaried employees, whether at retailers, warehouses, manufacturers, trucking firms or other employers.
Annual contribution limits for IRAs will be set at $7,000, also a $500 increase from the previous year’s limit.
The income ranges regarding eligibility to make deductible contributions to traditional IRAs and Roth IRAs and to claim Saver’s Credit also increased for 2024. For single taxpayers covered by an employer retirement plan, the phase-out range will be between $77,000 and $87,000 — up from $73,000 to $83,000. Likewise, for couples filing taxes jointly, the spouse covered by the employer retirement plan can make up to between $123,000 and $143,000 — another phase-out range greatly increased, from a $116,000 to $136,000 range.
The IRS announcement comes on the heels of a MetLife study in which employees overwhelmingly said that understanding their benefits better would give them “a greater sense of overall stability,” with 50% saying more clarity around their benefits would make them more loyal to the employer.