Maximizing Retirement Savings in 2024: Key IRS Inflation Adjustments
As inflation continues to impact our economy, the IRS has adjusted the retirement contribution limits for 2024, allowing individuals to maximize their tax-advantaged savings. Here's what you need to know about these updated limits and how they can benefit your retirement strategy.
1. 401(k) and Other Employer-Sponsored Plans
For 2024, the contribution limit for 401(k), 403(b), and most 457 plans increases from $22,500 to $23,000. Additionally, the catch-up contribution for those aged 50 or older rises to $7,500, allowing eligible participants to contribute up to $30,500 annually.
2. IRA Contribution Adjustments
The limit for Individual Retirement Accounts (IRAs) will be $7,000 in 2024, up from $6,500 in 2023. Those aged 50 and above can make catch-up contributions of $1,000, bringing their total to $8,000.
3. Income Phase-Out Adjustments
The IRS has also raised income thresholds for deducting traditional IRA contributions:
Single filers can deduct contributions if their income is below $78,000 (up from $76,000).
Married couples filing jointly can claim a deduction if their income is under $125,000, an increase from $123,000.
For Roth IRAs, contributions phase out for single filers at incomes between $144,000 and $159,000 and for married couples between $216,000 and $226,000.
4. Health Savings Account (HSA) Contribution Increases
If you’re utilizing an HSA in conjunction with a high-deductible health plan (HDHP), contribution limits also see a boost for 2024. The individual limit increases to $4,150, while the family contribution limit is now $8,300.
How to Take Advantage of These Adjustments
Increased limits mean enhanced potential for tax-deferred growth. Individuals and couples should consider adjusting their contributions early in 2024 to capture the full benefit. Consulting a financial advisor can help ensure you’re maximizing your retirement accounts in alignment with these updated limits.
Please reach out to our office to discuss how these adjustments might impact your retirement planning strategy.
