IRS 401K Limits 2024: The Internal Revenue Service’s (IRS) recent announcement of the anticipated adjustments to investor contribution limitations for various retirement accounts in 2024 may have a significant impact on retirement savings plans. These changes primarily affect individual retirement accounts (IRAs) and 401(k) plans; they affect income ranges and contribution caps.
The employee contribution cap for 401(k) plans is expected to climb from $22,500 to $23,000 in 2024. At the same time, catch-up contributions for those over 50 will stay at $7,500. This modification also applies to most 457 plans, thrift savings plans, and other retirement accounts, including 403(b) plans.
Heads up, 401(k) savers! In 2024, the contribution limit is up by $500. That’s $23,000 for some and $30,500 for others. But here’s a common mix-up: maxing out doesn’t just mean getting the maximum match. It’s about hitting that IRS limit. Let’s clear up the confusion and maximize… pic.twitter.com/AdclOKuweR
— Nick Hopwood, CFP 💰 (@nhopwood1) December 20, 2023
The maximum contributions for IRAs have been increased; investors can now contribute up to $7,000 in 2024 instead of $6,500 in 2023. For IRAs, the $1,000 fixed catch-up contribution remains intact. Interestingly, a higher AGI phaseout range for heads of households and single people may broaden eligibility for Roth IRA contributions in 2024.
They have also modified the phaseout of Roth IRA contributions for married couples filing jointly; it now ranges between $230,000 and $240,000 in 2024, instead of ranging from $218,000 to $228,000. Thanks to these changes, more people and families will be able to take advantage of retirement savings opportunities.
The IRS is increasing 401(k) and IRA contribution limits in 2024. Here’s how much you can save. https://t.co/AlU6Hr5kqd
— Buy Side from WSJ (@BuySideWSJ) December 23, 2023
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The IRS expanded its income ranges.
Apart from increased contribution caps, the IRS has expanded the income thresholds that qualify for the credit for retirement savings contributions and the deduction of pretax IRA deposits where a workplace plan is in place. The modifications intend to increase economic adaptability and offer individuals opportunities to maximize their retirement reserves.
Financial counselors emphasize the significance of incorporating these changes into year-end financial planning strategies. As the year draws to a close, we urge people to consider these updated salary ranges and contribution caps and make well-informed decisions regarding their retirement savings.
The IRS has announced new increases to retirement savings contributions for 2024 for IRAs, 401(k)s, and other accounts.https://t.co/YJyVOyXfzi
— XML Financial Group (@XMLFinancial) December 20, 2023
Advisor: “High-net-worth clients must be aware of these changes and consider how they can optimize their retirement savings in light of the new limits and income ranges.” The advisor emphasizes the importance of high-net-worth clients staying informed about these changes.
With the IRS announcing higher contribution caps for 401(k) plans, IRAs, and other retirement accounts, people now have a chance to reassess their future savings objectives and manage their finances strategically for the coming year.
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