In a recent announcement, the Internal Revenue Service (IRS) released the expanded contribution limits for retirement savings in 2024. The changes to contribution limits across various retirement plans create exciting prospects for individuals to optimize their financial portfolios and enhance their long-term financial security.
401(k) Plans: Amplifying Workplace Contributions
One highlight of the updates is the expansion of contribution limits for 401(k) plans. In the upcoming year, employees can now contribute up to $23,000, a step up from the previous limit of $22,500 in 2023. For those aged 50 and above, catch-up contributions remain at a steady $7,500. It’s worth noting that these changes also extend to other plans like 403(b), most 457 plans, and Thrift Savings Plans.
Individual Retirement Accounts (IRAs): Opportunities for Increased Savings
There are increased limits for Individual Retirement Accounts (IRAs) as well. In 2024, investors can contribute up to $7,000, up from $6,500 in the previous year. The catch-up contribution limit for IRAs remains unchanged at $1,000.
Roth IRA Expansion: Broadening Eligibility Horizons
There is good news for Roth IRA contributors in 2024 also. The adjusted gross income phaseout range has widened, potentially allowing more individuals to qualify for contributions. Single individuals and heads of households can now contribute to Roth IRAs with an adjusted gross income ranging from $146,000 to $161,000, up from $138,000 to $153,000 in 2023. For married couples filing jointly, the phaseout range was expanded to $230,000 to $240,000 in 2024, compared to $218,000 to $228,000 in the previous year.
Enhanced Eligibility for Tax Benefits
Beyond contribution limits, the IRS has also increased income ranges determining eligibility for key tax benefits. This includes the retirement savings contributions credit and the ability to deduct pretax IRA deposits when participating in a workplace plan. These adjustments aim to provide additional financial incentives for individuals to actively engage in retirement savings.
Conclusion: Seizing Financial Opportunities
These changes provide individuals with a chance to strategically plan for their retirement, capitalizing on higher contribution ceilings and expanded eligibility criteria. As we enter the new year, it’s an ideal time for Americans to reassess their financial goals and leverage these enhancements to build a more secure and prosperous future.