IRS Increases IRA Limit to $7,000 for 2024

The Internal Revenue Service (IRS) announced today that the limit on annual contributions to an IRA increased to $7,000, up from $6,500. Also, the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023. The limit on annual contributions to an IRA increased to $7,000, up from $6,500 in 2024. 

That means that individuals can put more into their retirement accounts than they did in 2023.

Details

The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan is increased to $23,000, up from $22,500.

The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2024.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $30,500, starting in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2024.

You can read more info here: Internal Revenue Service (irs.gov)

Contributing Less to Retirement

These changes come at a time when, amid inflation concerns and financial stressors, survey data also reveals Americans are contributing less to their retirement. Almost three in five (58%) working adults have contributed less money toward retirement due to inflation, with 69% of Millennials cutting their retirement contributions.

Additionally, nearly half of the respondents (49%) reported that they were unsure of how much money they needed to retire comfortably, with 55% of Baby Boomers agreeing.

Chad Duncan, MSFP, AFC®, Minimalist Financial, understands the confusion, “Knowing how much to contribute to your retirement accounts, where to invest it, and if what you are doing is enough can be overwhelming. Not to mention including taxes, incorporating inflation, and assessing your risk tolerance. These can be resolved by working with an advisor or picking up a retirement book and calculator.”

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