Updated 2024 Retirement Plan and IRA Contribution Limits: What You Need to Know
Stay ahead of the curve with the latest changes in retirement plan and IRA contribution limits for 2024. The IRS has announced significant updates that could impact your retirement savings strategy. Here’s a breakdown of the key adjustments and how they affect your financial planning.
Key Changes for 2024 Retirement Plans and IRAs
The IRS has increased various contribution limits for 2024, providing opportunities for individuals to maximize their retirement savings:
401(k), 403(b), and Similar Plans: The salary-reduction contribution limit rises to $23,000, up from $22,500 in 2023. This allows employees to contribute more towards their retirement savings through these employer-sponsored plans.
IRAs: The annual contribution limit for IRAs has been raised to $7,000, compared to $6,500 previously. Individuals aged 50 and over can still make an additional catch-up contribution of $1,000.
Catch-Up Contributions: Participants aged 50 and older in 401(k), 403(b), and most 457 plans, as well as the Thrift Savings Plan, can contribute up to $30,500 ($23,000 + $7,500) in 2024, including catch-up contributions.
Phase-Out Rules for IRAs: Income ranges determining eligibility for deductible contributions to traditional IRAs and contributions to Roth IRAs have also increased. This includes adjustments to income thresholds for claiming the retirement saver’s credit.
Understanding Phase-Out Ranges and Eligibility
It’s crucial to understand the phase-out ranges for IRA contributions in 2024:
Single Taxpayers
: Phase-out range for deductible contributions increased to $77,000–$87,000.
Married Filing Jointly
: Phase-out range for IRA contributors increased to $123,000–$143,000 if the contributing spouse is covered by a retirement plan.
Married Filing Separately
: Phase-out range remains $0–$10,000.
Roth IRA Contributions
: Income phase-out range for Roth IRA contributions increased to $146,000–$161,000 for singles and heads of household, and $230,000 –$240,000 for married couples filing jointly.
Maximizing Your Retirement Savings
These updates present opportunities to optimize your retirement savings strategy. Whether you’re contributing to a 401(k), IRA, or considering Roth IRA options, staying informed about these changes can help you make the most of your retirement planning efforts.
Conclusion
As you plan for your financial future in 2024, understanding these updated retirement plan and IRA contribution limits is essential. Consult with a financial advisor or tax professional to tailor a retirement strategy that aligns with your goals and maximizes tax advantages.