Keeping up with retirement savings can be a bit like gardening – you plant seeds now for a bountiful harvest later. As we look ahead to 2024, the IRS has made some updates for the year 2024 that increase how much you can contribute to your retirement accounts. These changes mean you could potentially save more, get bigger tax breaks, and watch your retirement savings grow. Let us walk through these updates together, so you can make the most of your contributions in the coming year.
INCREASES IN CONTRIBUTION LIMITS
Saving More in Your Work Retirement Plan:
Starting in 2024, you can save more in your workplace retirement accounts. For plans like 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, the amount you can contribute has increased to $23,000, which is $500 more than before.
Extra Savings for Those 50 and Older:
If you’re 50 years old or older, you’re allowed to save an additional amount, known as a catch-up contribution. This catch-up amount hasn’t changed; it’s still $7,500. So, in total, if you’re 50 or over, you can save up to $30,500 in your work retirement plans.
IRA Contribution Increase:
For those saving with an Individual Retirement Account (IRA), the limit has gone up to $7,000, which is an increase of $500. The catch-up limit, which is the extra amount you can contribute if you are 50 or older, remains at $1,000.
SIMPLE Plan Savings Bump:
If you’re saving with a SIMPLE retirement account, the amount you can contribute has risen to $16,000. This is $500 more than last year’s limit.
INCOME PHASE-OUT RANGES AND OTHER CHANGES
Deduction Limits Based on Income:
There are income ranges that determine if you can deduct your retirement contributions on your taxes. These ranges have increased. For instance, single taxpayers with a retirement plan at work can now earn more and still deduct their contributions – up to $77,000 to $87,000.
Roth IRA Contribution Ranges:
For Roth IRAs, the income limits have also gone up. If you’re single or the head of a household, you can earn between $146,000 and $161,000 and still contribute to a Roth IRA. Married couples who file jointly have a range of $230,000 to $240,000.
Saver’s Credit Adjustments:
The Saver’s Credit is a tax credit for low and moderate-income workers who save for retirement. The income limit for this credit has also increased , which could mean a larger credit when you file your taxes.
Charitable Contributions from IRAs:
The IRS has upped the limit on how much you can give to charity from your IRA without having to pay taxes on it. The new limit is $105,000.
As we get ready to embark on a new year, these updates from the IRS could help your retirement goals by allowing you to save more. It is wise to take advantage of these increased limits to secure a comfortable and rewarding retirement. Start planning now to adjust your contributions for 2024, and if you have any questions or need guidance, remember that our professionals are here to help every step of the way. Let us make this coming year a milestone for your retirement goals, ensuring that when the time comes, you will be ready to reap the rewards of your hard work and savings.
Source: www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000