Retirement savings limits are increasing.
The IRS has announced changes to retirement contribution limits for 2024, affecting various retirement savings options:
401(k) Plans: The annual contribution limit for 401(k) plans will increase to $23,000 in 2024, up from $22,500 in 2023. For individuals aged 50 and over, the catch-up contribution limit will be an additional $7,500, allowing a total contribution of $30,500.
IRA Plans: The annual contribution limit for IRAs will rise to $7,000 in 2024, compared to $6,500 in 2023. For individuals aged 50 and over, the catch-up contribution remains at $1,000, making a total of $8,000.
Roth IRAs: Contributions to Roth IRAs are not tax-deductible, but qualified withdrawals are typically tax-free. The annual contribution limit for Roth IRAs also increases to $7,000 in 2024.
SIMPLE Retirement Accounts: The contribution limit for SIMPLE IRA plans is set to rise to $16,000 in 2024, with a catch-up contribution limit of $3,500 for those aged 50 and over.
Saver’s Credit: Low- and moderate-income workers can claim a tax credit for eligible contributions to IRAs or employer-sponsored retirement plans. The income limits for this credit will increase in 2024.
Defined Benefit Plans: The annual benefit limit under defined benefit plans will increase to $275,000 in 2024.
QLACs: The dollar limit on premiums paid for a qualified longevity annuity contract (QLAC) has been increased.
Qualified Charitable Distributions (QCDs): The total amount of QCDs that can be excluded from gross income will rise to $105,000 in 2024. There’s also an option to make a one-time election for a QCD to a split-interest entity.
These adjustments are a result of cost-of-living changes and offer individuals more opportunities to save for retirement. It’s important for individuals to consider these changes and consult with financial advisors to make the most of their retirement savings options.
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