The IRS today issued annual guidance that adjusts for inflation the dollar limitation amounts for 401(k) plans, pension plans and other retirement provisions for 2024.

As provided in Notice 2023-75, the contribution limit for employees who participate in 401(k) and similar defined contribution plans will increase from $22,500 to $23,000. The catch-up contribution for those 50 or older for these types of plans remains at $7,500 in 2024.  

The contribution limit for IRAs will increase by $500 to $7,000. "The IRA catch up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost of living adjustment but remains $1,000 for 2024," the IRS explains. The agency notes the following phase-out ranges for IRAs:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $77,000 and $87,000, up from between $73,000 and $83,000;
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $123,000 and $143,000, up from between $116,000 and $136,000;
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000; and
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

The IRS is also adjusting the dollar limitation under Internal Revenue Code section 416(i)(1)(A)(i) concerning the definition of "key employee" in a top-heavy plan, raising the limit to $220,000. The limitation used in the definition of "highly compensated employee" under section 414(q)(1)(B) will increase from $150,000 to $155,000. Many other inflation adjustments for various retirement-related tax provisions are included in today's guidance.

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.