2024 Retirement Updates: Key Changes in Contribution Limits and Phase-Outs
Below is a summary highlighting significant changes to contribution limits and income eligibility phase-outs. Whether you’re actively contributing to a workplace retirement plan or contemplating an IRA, being aware of these adjustments is important for making well-informed financial decisions.
Contribution Limit Changes
- The contribution limit for 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, have increased to $23,000.
- The annual contribution limit to an IRA has been raised to $7,000.
- If you’re 50 or older, you can make catch-up contributions to your retirement plans, with a limit of $7,500 for 401(k), 403(b), and most 457 plans. This means individuals in these plans can now contribute up to $30,500 in 2024.
Phase-Out Changes
Contributors to a traditional IRA may be eligible to qualify for tax deductions under specific conditions. If either the taxpayer or their spouse participated in a workplace retirement plan during the year, the deduction may be reduced or phased out, depending on filing status and income. For 2024, the eligibility income ranges for deductible contributions have increased; the corresponding phase-out ranges are provided below:
- For singles covered by a workplace retirement plan, the phase-out range now extends from $77,000 to $87,000.
- Married couples filing jointly, with the contributing spouse covered by a workplace plan, see an increase in the phase-out range to $123,000 to $143,000.
- IRA contributors not covered by a workplace plan but married to someone who is experience an increased phase-out range of $230,000 to $240,000.
- Married individuals filing separately and covered by a workplace retirement plan don’t have an increase and maintain a phase-out range between $0 and $10,000.
For those making contributions to a Roth IRA, the income phase-out range is elevated to:
- $146,000 to $161,000 for singles and heads of household.
- Married couples filing jointly experience an increase to $230,000 to $240,000.
- The phase-out range for a married individual filing separately contributing to a Roth IRA remains unchanged at $0 to $10,000.
The 2024 adjustments to contribution limits and phase-outs present fresh opportunities and considerations for your retirement planning. Whether capitalizing on higher contribution limits or navigating through phase-out ranges, staying well-informed ensures optimal utilization of available options. Connect with your Destiny Capital team to explore the best strategies as you progress on your path to a secure and prosperous retirement.
Source: IRS Gov
Important note and disclosure: This article is for informational purposes only and should not be relied upon as a basis for your investment, business, or personal financial decisions. We recommend consulting with your wealth advisor, CPA/tax advisor and/or attorney, as applicable to your situation, prior to implementing any new tax, legal, or investment strategy. Advisory services provided by Destiny Capital Corporation, a Registered Investment Adviser.
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