2024 Retirement Plan Maximums and Limits/Saver's Credit

The Internal Revenue Service (IRS) has announced the dollar maximums and limits for qualified pension plans for 2024. These reflect the applicable cost-of-living adjustments required by federal tax law and are effective for the 2024 tax year only.

Sections 1–3 highlight contribution maximums and limits established by the IRS for various retirement plans. All dollar amounts are effective January 1, 2024; changes, if any, from 2023 are noted. Section 4 highlights annual compensation amounts for highly compensated employees and key employees in a top-heavy plan. Section 5 highlights the Saver's Credit tax credit for 2024.

The following table highlights contribution maximums established by the IRS for various retirement plans. All dollar amounts are effective January 1, 2024.

Plan Maximum Elective Deferral or Contribution Limit1 Increase from 2023 Age 50 and Older Additional "Catch-Up" Contribution Limit
TDA, 403(b) Thrift and 401(k)2

$23,000

$500

$7,5003
SIMPLE IRA and SIMPLE 401(k)

$16,000

$500

$3,500
Traditional IRA and Roth IRA

$7,000

$500

$1,000
Section 457(b) Eligible Deferred Compensation

$23,000

$500

$7,5003

1If annual compensation is less than the applicable limits shown, then the maximum contribution is limited to 100% of compensation.

2If you contribute to a TDA, 403(b) Thrift and/or 401(k), then generally the total amount contributed to all plans may not exceed $23,000 ($30,500, if age 50 or older). Exceptions apply to certain 403(b) plan participants and governmental 457(b) plan participants.

3Tax-Deferred Annuity, 403(b), 401(k) and Governmental Section 457(b) Plans. Non-governmental Section 457(b) Eligible Deferred Compensation Plans are not permitted to make age 50 catch-ups, but can make a special catch-up contribution if they are within three years of their normal retirement age.

Plan Annual Compensation Limit for Contribution Purposes Increase from 2023
TDA, 403(b) Thrift and 401(k), Defined Benefit and Defined Contribution Plans

$345,000 maximum compensation

$15,000
SEP participant requirements

$750 minimum compensation

unchanged
SEP discrimination requirements

$345,000 maximum compensation

$15,000
Roth IRA

Contribution limit is reduced or eliminated based on the amount by which the taxpayer's Adjusted Gross Income (AGI) minus an "applicable AGI amount" exceeds $15,000 ($10,000 for married taxpayers filing a joint return).

Applicable AGI amounts for 2024:
$230,000 to $240,000 (married filing joint return)
$0 to $10,000 (married filing separate return)
$146,000 to $161,000 (all other taxpayers)

$12,000
unchanged
$8,000
Traditional IRA

Deduction for contribution is reduced or eliminated for an active participant in an employer-sponsored retirement plan, based on the amount by which the taxpayer's AGI minus an "applicable AGI amount" exceeds $10,000 ($20,000 for an active participant who is a married taxpayer filing a joint return).

Applicable AGI amounts for 2024 for active participants:
$123,000 to $143,000 (married filing joint return)
$0 to $10,000 (married filing separate return)
$77,000 to $87,000 (all other taxpayers)

$7,000
unchanged
$4,000

For a married taxpayer filing a joint return who is not an active participant in an employer-sponsored retirement plan, but whose spouse is, the $10,000 amount mentioned above is not increased to $20,000 and the "applicable AGI amount" for 2024 is $230,000 to $240,000 (a $12,000 increase from 2023).

These are limits established by the Internal Revenue Code. In some cases, employers may set lower annual limits for your plan. In addition, these limits are generally applied in the aggregate.

The elective deferral limit applies to all voluntary salary reduction amounts made by an employee to any plan. The defined contribution plan annual additions limit applies to all annual additions to all defined contribution plans (including 401(k) and profit-sharing plans) and SEP-IRAs of the same employer. Additional limits may apply, depending on the type of plan, which may further limit elective deferrals and/or annual additions. Contribution limits are not necessarily equal to employer deduction limits, and generally, these plans also further limit contributions for taxable employers to the deduction limit.

Similarly, the limits on annual benefits in a defined benefit plan apply to all defined benefit plans of the same employer and cannot exceed 100% of a participant's average compensation, if less. These annual benefit limits are expressed as non-refund life annuities at age 65 and are reduced for different forms and ages and for participation of less than 10 years, and may be further reduced if certain provisions are applicable, such as cost-of-living adjustment features.

Plan Applicable Maximum Increase from 2023
Defined Benefit

$275,000 on annual benefits*

$10,000
Defined Contribution

$69,000 or 100% of compensation, whichever is less, on annual contributions

$3,000

*Or 100% of compensation for high 3 years, whichever is less.

These are limits established by the Internal Revenue Code. In some cases, employers may set lower annual limits for their plan(s). In addition, these limits are generally applied in the aggregate.

The defined contribution plan annual additions limit applies to all annual additions to all defined contribution plans (including 401(k) and profit-sharing plans) and SEP-IRAs of the same employer and cannot exceed 100% of a participant's average compensation, if less.

Plan Applicable Maximum Increase from 2023
Definition of Highly Compensated Employee

$155,000

$5,000
Definition of Key Employee in a Top-Heavy Plan

$220,000

$5,000

These amounts are established by the Internal Revenue Code.

The Saver's Credit is a tax credit of up to $1,000 ($2,000 if married filing jointly) for low- and moderate-income taxpayers who contribute to a traditional or Roth IRA, 401(k), 403(b), governmental 457 or SIMPLE IRA plan. The credit is equal to 50%, 20%, 10% or 0% of your contribution, depending on your adjusted gross income. The following table shows the income limits to claim the credit for 2024.

Credit Rate (% of contribution) Married Filing Jointly Head of Household All Other Filers*
50%

Up to $46,000

Up to $34,500

Up to $23,000
20%

$46,001–$50,000

$34,501–$37,500

$23,001–$25,000
10%

$50,001–$76,500

$37,501–$57,375

$25,001–$38,250
0%

$76,501 & up

$57,376 & up

$38,251 & up

*Single, married filing separately or qualifying widow(er).

The tax information contained herein is for informational purposes only. You should consult your financial adviser or attorney regarding your individual circumstances.

You should consider the investment objectives, risks, and charges and expenses of the investment funds and, if applicable, the variable annuity contract, carefully before investing. This and other information is contained in the funds' prospectuses and summary prospectuses and the contract prospectus or brochure, if applicable, which can be obtained by calling 800.468.3785 or visiting mutualofamerica.com. Read them carefully before investing.

 

Mutual of America's group and individual retirement products that are variable annuity contracts are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment options you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should consider a variable annuity contract's other features before making a decision.