IRA Contribution Limit Raised to $7,000 for 2024
The IRS has released its official cost-of-living adjustments for 2024, which include several updates that impact retirement planning. Among the most notable changes, individuals can now contribute more to IRAs, helping them stay aligned with inflation and long-term savings goals. These new limits apply to both traditional and Roth IRAs, as well as to related strategies that affect tax deductions, charitable giving, and income phase-outs.
Standard and Catch-Up Contribution Limits for 2024
For 2024, the annual IRA contribution limit increases to $7,000, up from $6,500 in 2023. Individuals age 50 and older can still make an additional $1,000 catch-up contribution. This brings their total limit to $8,000 for the year.
While the $1,000 catch-up contribution remains unchanged, the SECURE 2.0 Act has now tied this figure to inflation. Though it doesn’t increase this year, future cost-of-living adjustments may raise that threshold going forward. This change gives older investors more room to enhance their retirement savings in the years leading up to retirement.
SECURE 2.0 and Expanded Inflation Adjustments
Several other retirement-related thresholds introduced or expanded under the SECURE 2.0 Act also apply in 2024. One example involves qualifying longevity annuity contracts (QLACs), where the maximum allowable investment remains at $200,000. This cap was previously raised by SECURE 2.0 and remains unchanged for this tax year.
Charitable giving from IRAs also receives a boost. The maximum amount an individual can transfer directly to a charity through a qualified charitable distribution (QCD) increases to $105,000, up from $100,000 in 2023. This marks the first time QCD limits have been indexed for inflation. Those planning a one-time QCD transfer to a split-interest entity can now contribute up to $53,000, a modest increase from the previous limit of $50,000.
Income-Based Phase-Outs and Deduction Rules
In addition to contribution amounts, the IRS has adjusted the income ranges that affect eligibility for tax deductions on traditional IRA contributions and the ability to contribute to a Roth IRA. These phase-outs are based on modified adjusted gross income (MAGI) and whether the account holder or their spouse participates in a workplace retirement plan.
For single filers participating in an employer-sponsored plan, the phase-out range now falls between $77,000 and $87,000, an increase from the previous $73,000 to $83,000 range. For married couples filing jointly, the deduction begins to phase out at $123,000 and disappears entirely at $143,000 when the contributing spouse is also covered by a workplace plan.
In households where the IRA contributor is not covered by a retirement plan, but their spouse is, the updated phase-out range is between $230,000 and $240,000. Last year, the limits for these households ranged from $218,000 to $228,000.
The Roth IRA contribution limits also shift for 2024. Single filers can contribute fully if their MAGI is below $146,000. Partial contributions are allowed until income reaches $161,000. For married couples filing jointly, the full contribution limit applies until MAGI reaches $230,000, phasing out entirely at $240,000. These higher limits may allow more households to contribute directly to Roth IRAs in 2024 than in prior years.
Saver’s Credit and Employer Plan Updates
The Saver’s Credit, designed to encourage retirement savings among low- and moderate-income earners, also sees adjusted income thresholds. In 2024, the credit applies to married couples filing jointly with income up to $76,500 and to single filers with income up to $38,250. These changes expand eligibility for those who contribute to retirement accounts like IRAs and workplace plans.
For business owners and self-employed individuals, adjustments to SEP and SIMPLE IRA plans may also impact contribution strategies. The SEP IRA limit is now based on 25% of up to $345,000 of compensation, with a maximum annual contribution capped at $69,000. SIMPLE IRA participants can defer up to $16,000 in 2024, an increase from $15,500 the previous year. The catch-up contribution for those aged 50 or older remains at $3,500.
Strategic Considerations for Retirement Planning
The increase in contribution limits and income thresholds provides an opportunity for savers to reassess their retirement strategies. Investors nearing retirement age should consider maximizing catch-up contributions to make the most of tax-deferred or tax-free growth. Those with access to both a workplace plan and an IRA may need to evaluate their income levels to determine whether traditional IRA contributions will be deductible.
For households nearing Roth IRA income thresholds, it’s important to review projected earnings, bonuses, or investment gains that could impact eligibility. In cases where income may exceed Roth limits later in the year, strategies like backdoor Roth contributions may still offer a viable path—though timing and execution must align with IRS rules.
Retirees or those approaching required minimum distribution age may also benefit from the expanded QCD limits. Direct charitable transfers can reduce taxable income while supporting causes they care about. These strategies require planning and should be coordinated with a financial advisor or tax professional to ensure compliance and optimize benefits.
In Summary
The 2024 IRA contribution limit increase—along with higher income thresholds and updates under SECURE 2.0—provides more flexibility and savings potential for individuals and families. With traditional and Roth IRA options available, and enhanced planning opportunities for charitable giving and business owners, these updates allow savers to better align retirement contributions with their financial goals and income levels.
Understanding these changes helps investors make smarter, tax-efficient decisions throughout the year. Whether adjusting contributions, revisiting IRA eligibility, or planning charitable strategies, staying current with IRS limits ensures retirement planning remains on track.
If you’re unsure how the 2024 limits affect your individual situation, the advisors at California Retirement Advisors are here to help. We can guide you through eligibility, contribution planning, and coordination with your broader retirement strategy.
FAQ: 2024 IRA Contribution Changes and Rules
What is the new IRA contribution limit for 2024?
You can contribute up to $7,000 if you’re under 50, or $8,000 if you’re 50 or older.
Did the Roth IRA income limit increase for 2024?
Yes. For single filers, Roth contributions phase out between $146,000 and $161,000. For joint filers, the range is $230,000 to $240,000.
Can I deduct my traditional IRA contribution in 2024?
It depends on your income and whether you or your spouse are covered by a workplace plan. The deduction begins to phase out at $77,000 for singles and $123,000 for married couples filing jointly.
What is the new QCD limit for 2024?
The qualified charitable distribution limit increases to $105,000, indexed for inflation for the first time.
How does the new catch-up contribution rule work?
The catch-up contribution remains at $1,000 in 2024 but will be adjusted for inflation in future years.
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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.