What Are the 2024 401k, IRA, and HSA Contribution Limits?
(And 403(b), 457, TSP, and Roth)?
Each year, the IRS adjusts contribution limits for retirement and other tax-advantaged savings accounts based on inflation.
We’ve known what the impact to Health Savings Accounts would be for a while now, but today, November 1st, the IRS has finally released that information for employer-sponsored plans like 401(k)s, and they’ve also increased contribution limits for IRAs too.
Additionally, for some time now the 2024 contribution limits for Health Savings Accounts have also been available.
We’ve listed those below along with a couple of other additional changes for 2024; namely, to Qualified Longevity Annuity Contracts (QLACs) and Qualified Charitable Distributions (QCDs).
401(K)s, 403(b)s, 457s, and TSPs
In 2024, the IRS will allow you to put an additional $500 in those tax-advantaged retirement plans.
Specifically, these limits cover 401(k)s, 403(b)s, 457s, and Thrift Savings Plans (TSPs).
If you’re 50 and older, you still get an additional $7,500 of contribution space, which is unchanged from 2023.
That $500 represents a whopping 2.2% increase for those of you under 50 and only 1.7% for those of you who are 50 plus.
As of November 1st, when I’m posting this, inflation is on pace for a 3.3% increase over the last year.
So, this falls kind of short of that.
IRAs
IRAs (both Roth and Traditional) will also see a $500 increase in contribution limits in 2024.
Since IRA contribution limits are a fraction of those for employer-sponsored plans, the increase as a percentage of the previous maximum is much higher at 7.7% and 6.7% for those aged 50 and up.
In case you’re wondering, these amounts represent the cumulative total that you can commit to all of your IRAs in a single tax year.
So, if you’re under 50 and you contribute $3,000 to a Traditional IRA and decide halfway through the year to make the remainder of your contributions to a Roth IRA, you’ll have $4,000 of room left before you hit your annual max.
Next up are the income limitations for the deductions one can take for Traditional IRA contributions.
As a reminder, anyone can contribute to a Traditional IRA, but contributions only earn tax deductions if your income falls within certain ranges.
Here are the income ranges for those covered by a retirement plan at work:
And for those who are not covered by a retirement plan at work:
Depending on your personal filing situation, these income brackets increased anywhere from roughly 5.25%-6%, which is actually a little ahead of increases in wages over the last year.
Finally, here are the income restrictions for Roth IRA contributions in 2024. They’ve been increased at the same 5.25%-6% rate as Traditional IRA income requirements.
As a reminder, Roth contributions do not receive a tax deduction like Traditional contributions do, but all earnings and withdrawals in a Roth account are completely tax-free.
Health Savings Accounts
The IRS announced changes to contribution limits for HSAs some time ago. We have those listed below.
To use an HSA, you must be enrolled in a high-deductible health plan (HDHP).
All contributions, earnings, and withdrawals from HSAs are completely tax-free if used for a qualified medical expense.
You can also use an HSA as a tax-deferred retirement account beginning at age 65, which basically means you get to treat it like a Traditional IRA or 401(k) at that point.
You will owe income tax on any distributions not used for medical expenses, but non-qualified withdrawal penalties expire when you turn 65.
Additional changes for 2024:
Here are a couple of other updates that I found interesting.:
- The limitation on premiums paid with respect to a qualifying longevity annuity contract (a.k.a. QLAC) remains at $200,000.
- The deductible limit on Qualified Charitable Distributions increased to $105,000, up from $100,000.
- The threshold for “Highly Compensated Employees” (applicable to 401k plans that do not qualify under safe harbor rules) has been raised to $155,000.
- The annual limit for SIMPLE IRAs increased from $15,500 to $16,000
Happy Investing!
