Retirement Planning Key Numbers for 2024
Terry Herr, CFP®
The Internal Revenue Service recently released updated income tax brackets, standard deduction, and retirement contribution limits for the 2024 tax year. Overall, more than 60 provisions have changed. While these taxes are not due for some time, it may benefit you to start thinking ahead. Some of the key 2024 numbers are listed below, with the corresponding limit for 2023. (The source for the 2024 numbers is IRS Notice 2023-75.)
Tax Bracket Inflation Adjustment
Overall, tax brackets have been adjusted upwards by 5.4% for 2024. The primary purpose of this adjustment is to account for inflation, which is based on the Consumer Price Index. The government’s goal is to keep income taxes in sync with consumer buying power.
Standard Deduction
The standard deduction has increased to $29,200 for married couples filing jointly, up $1,500 from the previous year. For single filers, this number increased by $750 to $14,600.
Elective Deferral Limits |
2023 |
2024 |
| 401(k) plans, 403(b) plans, 457(b) plans, and SAR-SEPs1 (includes Roth contributions) | Lesser of $22,500 or 100% of participant's compensation ($30,000 if age 50 or older) 2 | Lesser of $23,000 or 100% of participant's compensation ($30,500 if age 50 or older) 2 |
| SIMPLE 401(k) plans and SIMPLE IRA plans1 | Lesser of $15,500 or 100% of participant's compensation ($19,000 if age 50 or older) | Lesser of $16,000 or 100% of participant's compensation ($19,500 if age 50 or older) |
| IRA Contribution Limits | 2023 |
2024 |
| Traditional and Roth IRAs | Lesser of $6,500 or 100% of earned income ($7,500 if age 50 or older) | Lesser of $7,000 or 100% of earned income ($8,000 if age 50 or older) |
| Defined Benefit Plan Annual Limits | 2023 |
2024 |
| Annual benefit limit per participant | Lesser of $265,000 or 100% of average compensation for highest three consecutive years | Lesser of $275,000 or 100% of average compensation for highest three consecutive years |
| Defined Contribution Plan Limits (qualified plans, 403(b) and SEP) |
2023 |
2024 |
| Annual addition limit per participant (employer contributions; employee pre-tax, after-tax, and Roth contributions; and forfeitures) | Lesser of $66,000 or 100% (25% for SEP) of participant's compensation | Lesser of $69,000 or 100% (25% for SEP) of participant's compensation |
Gift Tax
The annual gift tax exclusion is now $18,000 for 2024, an increase of $1,000 from the previous year.
This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
1Must aggregate employee deferrals to all 401(k), 403(b), SAR-SEP, and SIMPLE plans of all employers; 457(b) contributions are not aggregated. For SAR-SEPs, the percentage limit is 25% of compensation reduced by elective deferrals (effectively a 20% maximum contribution).
2Special catch-up limits may also apply to 403(b) and 457(b) plan participants.