With the new year approaching, significant shifts within the financial industry are set to impact tax strategies and retirement planning. The IRS has introduced multiple adjustments, from increased contribution limits to expanded income ranges, shaping the financial terrain for the coming year. Let's delve into the highlights of these changes and explore their potential implications for your financial decisions.
401(k), 403(b), and Thrift Savings Plan Contribution Limits: Employees participating in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will now enjoy an increased contribution limit of $23,000.
Catch-up Contributions for Individuals Aged 50 and Over: Recognizing the importance of catch-up contributions, the limit for employees aged 50 and over has been elevated to $7,500.
Enhanced Limits for SIMPLE Retirement Accounts: The limitation for SIMPLE retirement accounts has been raised to $16,000 in 2024.
Income Ranges for Traditional IRAs, Roth IRAs, and Saver's Credit: The income ranges determining eligibility for deductible contributions to traditional IRAs, contributions to Roth IRAs, and eligibility for the Saver's Credit have all expanded for 2024.
Phase-out Ranges for Traditional IRA Deductions:
- Single taxpayers covered by a workplace retirement plan: $77,000 to $87,000.
- Married couples filing jointly (with the contributing spouse covered by a workplace retirement plan): $123,000 to $143,000.
- IRA contributor not covered by a workplace retirement plan and married to someone who is covered: $230,000 to $240,000.
- Married individuals filing separately and covered by a workplace retirement plan: It remains between $0 and $10,000.
Increased Income Phase-out Ranges for Roth IRAs:
- Singles and heads of household: $146,000 to $161,000.
- Married couples filing jointly: $230,000 to $240,000.
- Married individuals filing separately: Remains $0 to $10,000.
Saver's Credit Income Limits:
- $76,500 for married couples filing jointly.
- $57,375 for heads of household.
- $38,250 for singles and married individuals filing separately.
Key Limit Increase for IRA Contributions: The limit on annual contributions to an IRA has risen to $7,000. Additionally, the catch-up contribution limit for individuals aged 50 and over remains unchanged at $1,000.
Whether contributing to a 401(k), considering IRA options, or aiming to qualify for the Saver's Credit, staying informed about these adjustments can help in making an educated decision and maximizing financial well-being in the years to come. In order to tailor these changes to your unique financial goals, consult with a financial advisor for assistance.