Last year’s inflation rates caused much higher than usual cost-of-living adjustments (COLAs) for retirement plans, including IRAs. This year, as the Federal Reserve’s monetary policy seems to be having some effect, inflation is moderating and the COLAs for 2024 are a bit more modest. Still, these annual adjustments affect everything from how much you can contribute to a plan to whether you can deduct your Traditional IRA contribution. These figures also determine your eligibility for Roth IRA contributions and how much extra you can add to your accounts once you reach your 50th year.
Use the charts below to help your planning for 2024 savings. But be sure to seek sound financial advice if you have questions about specific tax-related items.
Traditional and Roth IRAs
Whether you contribute to a Roth IRA or to a Traditional IRA (or both) may depend on your income and other factors. Both types of IRA have unique benefits. Traditional IRAs may give you an immediate benefit by providing a current-year tax deduction. Yet Roth IRAs offer the advantage of potential tax-free earnings. And some make contributions to both. If you’re eligible, this is fine—as long as your combined contributions do not exceed that annual contribution limit.
| Traditional & Roth IRA Contribution Limit |
2024 |
2023 |
| Maximum annual contribution |
$7,000 |
$6,500 |
| Maximum catch-up contribution (age 50 or older) |
$1,000 |
$1,000 |
Traditional IRA Deductions
If neither you nor your spouse participates in a workplace retirement plan, your income does not affect your Traditional IRA deductibility; you get to take a deduction irrespective of your income. But if either one of you—or both of you—benefit from an employer-sponsored retirement plan, your modified adjusted gross income will dictate whether you may claim a deduction.
2024 Traditional IRA Deductibility if IRA Owner Participates in an Employer-Sponsored Plan
| Filing Status |
Modified Adjusted Gross Income |
Deduction Eligibility |
| Single or head of household |
- $87,000 or more
- More than $77,000 but less than $87,000
- $77,000 or less
|
- Not deductible
- Partially deductible
- Fully deductible
|
| Married filing jointly and IRA owner is a participant in a workplace plan |
- $143,000 or more
- More than $123,000 but less than $143,000
- $123,000 or less
|
- Not deductible
- Partially deductible
- Fully deductible
|
| Married filing jointly and only IRA owner’s spouse is a participant in a workplace plan |
- $240,000 or more
- More than $230,000 but less than $240,000
- $230,000 or less
|
- Not deductible
- Partially deductible
- Fully deductible
|
| Married filing separately |
- $10,000 or more
- Less than $10,000
|
- Not deductible
- Partially deductible
|
Roth IRA Contributions
Your modified adjusted gross income will determine whether you can contribute to a Roth IRA. If you fall within the phase-out range, you are eligible to make a partial contribution.
2024 Roth IRA Contribution Eligibility
| Filing Status |
Modified Adjusted Gross Income |
Deduction Eligibility |
| Single or head of household |
- $161,000 or more
- More than $146,000 but less than $161,000
- $146,000 or less
|
- Not eligible
- Partial contribution
- Full contribution
|
| Married filing jointly |
- $240,000 or more
- More than $230,000 but less than $240,000
- $230,000 or less
|
- Not eligible
- Partial contribution
- Full contribution
|
| Married filing separately |
- $10,000 or more
- Less than $10,000
|
- Not eligible
- Partial contribution
|
Employer-Based Retirement Plans
The 2024 COLAs also affect contribution limits and other operational concerns (e.g., nondiscrimination testing) for IRA-based plans and other workplace plans such as 401(k) plans.
| Simplified Employee Pension (SEP) Plan |
2024 |
2023 |
| Minimum you must earn to be eligible for an employer contribution |
$750 |
$750 |
| Maximum employer SEP contribution = the lesser of 25% of compensation or this amount |
$69,000 |
$66,000 |
| Maximum compensation considered for calculating employer contributions |
$345,000 |
$330,000 |
| Savings Incentive Match Plan for Small Employers (SIMPLE) Plan |
2024 |
2023 |
| Maximum salary deferral amount |
$16,000 |
$15,500 |
| Catch-up contribution (age 50 or older in any year) |
$3,500 |
$3,500 |
| Maximum compensation considered for calculating an employer nonelective contribution |
$345,000 |
$330,000 |
| 401(k) Plan |
2024 |
2023 |
| Maximum salary deferral amount |
$23,000 |
$22,500 |
| Catch-up contribution (age 50 or older in any year) |
$7,500 |
$7,500 |
| Maximum employee and employer contributions combined (catch-up may increase this amount for deferral plans) |
$69,000 |
$66,000 |
| Maximum compensation considered for calculating employer contributions |
$345,000 |
$330,000 |
| Highly compensated employee compensation threshold for nondiscrimination testing |
$155,000 |
$150,000 |
| Maximum compensation subject to Social Security withholding |
$168,600 |
$160,200 |