Navigating Your Financial Future? Retirement Plan Limits In 2024.

As we step into the new year, it's crucial to stay informed about the latest changes in retirement plan limits to make the most out of your financial future. In 2024, several key numbers have been adjusted for inflation, impacting contribution limits for traditional and Roth IRAs, as well as work-based retirement plans. Let's delve into the details and explore how these changes might affect your retirement savings strategy.

1. IRA Contribution Limits:

For those considering individual retirement accounts (IRAs), both traditional and Roth, the maximum contribution in 2024 is set at $7,000, a $500 increase from the previous year. If you're 50 or older, you can contribute an additional $1,000 as a catch-up contribution. It's important to note that these limits apply collectively, meaning your total contributions to both traditional and Roth IRAs cannot surpass the annual limits.

2. Deductibility of Traditional IRA Contributions:

The deductibility of traditional IRA contributions depends on various factors, including your income, filing status, and whether you're covered by an employer-sponsored retirement plan. The income thresholds for claiming a full deduction have been adjusted for 2024, offering potential tax benefits to eligible individuals.

3. Roth IRA Contribution Limits:

If you're considering a Roth IRA, it's essential to be aware of the income limits. In 2024, the maximum contribution remains at $7,000 ($8,000 for those 50 and older). The income thresholds for full contributions have been adjusted, providing clarity on eligibility based on your filing status and modified adjusted gross income (MAGI).

4. Work-Based Retirement Plans:

For individuals participating in employer-sponsored retirement plans, such as 401(k), 403(b), and 457(b) plans, the elective deferral limit has increased to $23,000 in 2024. Catch-up contributions for those aged 50 and older remain unchanged at $7,500. The limits for SIMPLE IRA and SIMPLE 401(k) plans have also been adjusted, allowing for increased contributions.

5. Aggregate Limits and Defined Contribution Plans:

It's crucial to be mindful of aggregate limits if you participate in multiple retirement plans. The total elective deferrals, including catch-up contributions, cannot exceed the annual limit. However, deferrals to Section 457(b) plans are not included in this aggregate limit. Additionally, the maximum amount allocated to your account in a defined contribution plan has been raised to $69,000, encompassing both your contributions and employer contributions.

So as you plan for your financial future, understanding the changes in retirement plan limits for 2024 is crucial. If you have any questions or need personalized advice, don't hesitate to reach out or contact your tax advisor.

Wishing you a joyous holiday season and a prosperous New Year!

Jonathan Gassman CPA, CFP, CAP

?

DISCLAIMER: The information provided in this communication, including any accounting, business, financial, or tax advice, is for general guidance and should not be considered a comprehensive analysis or a substitute for formal professional opinions. It is not sufficient to avoid tax-related penalties. Please be aware that opinions and analyses can change over time. If you require a detailed analysis, we would be happy to conduct further research through a separate engagement, defined by specific terms. This material is not an offer or solicitation for the purchase or sale of any financial instrument, and the views expressed are solely those of the author.