The Internal Revenue Service (IRS) recently announced the 401(k) contribution limits for 2024 as well as information regarding both traditional and Roth IRAs. Unsurprisingly, contribution limits are rising because of continued inflation. If you’re looking for a way to put your best foot forward when it comes to retirement planning, here are some key changes to the contribution limits you’ll want to note.
Understanding 401k Contribution Limits for 2024
The IRS has increased the contribution limit for 401(k) plans for 2024 so individuals can now contribute up to $23,000. This is a $500 increase compared to the 2023 limit, so plan participants can save even more for their retirement. This increase will also be applied to 403(b) plans, most 457 plans, and the federal government's Thrift Savings Plan. However, the catch-up contribution limit for individuals aged 50 and over remains at $7,500 for 2024.
Changes to IRA Limits
Along with the 401(k) limit increase, the IRS has also made adjustments to the limits for Individual Retirement Accounts (IRA). The contribution limit for IRAs has risen to $7,000, a $500 increase from the previous year. IRA catch-up contribution limits will not be subject to an annual cost-of-living adjustment; therefore, it will remain at $1,000 for individuals aged 50 and over.
Be Prepared for 2024
The increased 401(k) contribution limits for 2024 present an excellent opportunity for individuals to bolster their retirement savings. However, it's essential to view the annual contribution limits as a goal rather than as a requirement. Each person's financial situation is unique, so contribute as much as you are able. Consider the increased limits as a prompt to analyze your current retirement savings contributions and make necessary adjustments. This proactive approach will help you take one step closer to your financial goals.
Along with providing high-quality professional administration services, RPCSI is committed to helping you stay updated with the latest guidelines, regulations, and news to remain informed about how your retirement plan may be impacted. Learn more about what the retirement landscape will look like in 2024 with our blog on 5 Retirement Trends for 2024.
