Late last year, The Internal Revenue Service (IRS) revealed a few changes to the rules around retirement plan contributions for the 2024 tax year. These adjustments bring good news for individuals looking to boost their savings and plan for a secure financial future. Let’s delve into the key highlights of these updates.
401(k) Contribution Limits Increase
The contribution limit for employees participating in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, has been raised to $23,000, up from $22,500. This cost of living adjustment allows individuals to save more for their retirement, contributing to a healthier financial outlook.
IRA Contribution Limits Rise
The limit on annual contributions to an Individual Retirement Account (IRA) has been increased to $7,000, providing individuals with the opportunity to save more for their golden years. The catch-up contribution limit for individuals aged 50 and over remains $1,000 for 2024.
Income Ranges for Deductible Contributions and Roth IRAs Increase
The income ranges determining eligibility for deductible contributions to traditional IRAs, contributing to Roth IRAs, and claiming the Saver’s Credit have all increased for 2024. This cost of living adjustment allows individuals who received income increases to maintain their eligibility, and allows individuals whose income remained stagnant a chance to qualify for added incentives.
Catch-Up Contributions for 50 and Older
For employees aged 50 and over participating in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, the catch-up contribution limit remains $7,500. This means that individuals in this age group can now contribute up to $30,500 this year.
Phase-Out Range Adjustments
The phase-out ranges for deductible contributions to traditional IRAs have been adjusted. For example, the phase-out range for single taxpayers covered by a workplace retirement plan now falls between $77,000 and $87,000.
Saver’s Credit Limit Increase
The income limit for the Saver’s Credit, designed to support low- and moderate-income workers, has been raised. Married couples filing jointly can now claim the credit with an income up to $76,500, up from $73,000.
Conclusion
Whether you’re contributing to a 401(k), IRA, or taking advantage of other retirement incentives, these changes offer valuable opportunities to enhance your financial well-being. It’s a great time to review your retirement savings strategy and take full advantage of these updated limits and benefits.
And remember, if you have not yet maxed out your contributions for 2023, the IRS allows you until April 15, 2024, to get it done!
Check with us to discover which IRA account is right for you, and be sure to schedule an appointment with one of our experienced financial advisors that can help ensure you have a proper roadmap to success.