IRS Changes for 2024!

The IRS has introduced changes to contributions for individual retirement accounts in 2024.  The max contribution changes for 401K, and most other employer sponsored retirement accounts, have been increased by $500 from $22,500 to $23,000. The catch-up contribution for 50+ investors is still $7,500, so a total of $30,500 can be invested in a traditional 401K for investors over the age of 50. The max contribution to a 401K plan has jumped from $66,000 to $69,000 in 2024 as well. If you read my previous article on the After-Tax 401K, you know that this affects that portion of the 401K (link to that article here). So, if you are under the age of 50, you can contribute $23,000 in traditional, and receive tax deferral on that, then contribute an additional $23,000 to your Roth 401K. This totals to $46,000, leaving an additional $23,000 that can be contributed to the After-Tax portion, which can be rolled into a Roth IRA once a year. Once again, this is a difficult strategy, but if done carefully and correctly can really build your wealth quickly.

On the IRA side we have also seen changes, including an increase in annual contribution limits from $6500 to $7000. The catch-up contribution has not changed for IRAs. These limits are for both traditional, and Roth. Roth IRAs are also seeing a change in income contribution limits, with the adjusted gross income phaseout range rising to between $146,000 and $161,000 for single individuals and heads of households, up from between $138,000 and $153,000 in 2023. For married couples filing jointly, the contribution phaseout range will rise to between $230,000 and $240,000. This is an increase from $218,000 to $228,000 in 2023.

These are the big changes that are coming in 2024. If you would like to stay in the know on other financial topics, join our newsletter here and receive a free eBook. As always, thanks for reading!