As with every new year, 2024 promises to bring many changes, financially and otherwise. This time, you can expect some changes to your retirement accounts that you should be aware of. At REAP Financial, we want to make sure you have all the information you need to boost your savings this year for your future retirement. To do so, you’ll need to be aware of the most important changes coming to retirement plans in 2024. For a detailed list of those, keep reading!
Increased 401(K) Limits
In 2024, you’ll be able to increase your retirement savings through higher 401(K) contributions For 2023, the limit for 401(K) contributions was $22,500. The limit will be $500 higher in 2024, at a total of $23,000. This applies to your 401(K), 403(B), 457, and Roth 401(K) accounts.
It’s important to note that these changes will not flow through to your retirement accounts automatically. In most cases, you will need to connect with whoever manages your 401(K), through your company’s HR or another platform to ensure you’re making the maximum contribution. So, as the New Year approaches, make sure you’re increasing your contributions to meet the new limit through your account provider, if you can. Depending on where you decide to put these new dollars, you can work to get the associated tax deductions today or boost your tax-free income in the future, in the case of the Roth 401(K). Either way, the increased 401(K) limits are not something you’ll want to miss out on!
Increased IRA Contribution Limits
More good news! The IRA contributions limit is going up by $500 in 2024, from $6500 to a total of $7000. As a reminder, if you’re over 50, you can still also put in an extra $1000 in catch up contributions, for an absolute max of $8000. This will apply to both traditional IRAs or Roth IRAs. This is the best time of year to revisit your accounts and make sure you’re hitting your contribution limits, based on your age.
Increased Qualified Charitable Distributions Limits
If you’re already retired and taking distributions from your retirement accounts, this one will be of interest to you! Qualified charitable distributions allow you to direct your retirement distributions to a charity (or multiple charities) of your choice. Previously, the limit on these charitable distributions was $100,000. In 2024, you’ll be able to contribute up to $105,000. This is a great way to give to charities you care about, in greater measure, in 2024! So, if you find yourself in a generous mood, know that your charitable distributions limits are slightly higher than they were in 2023.
Social Security Adjustments
Every year, we expect slight adjustments to Social Security to keep up with the current economic landscape. This year is no different! Due to inflation, there will be a 3.2% cost of living adjustment for Social Security recipients in 2024. This doesn’t seem like too much compared to the over 8% adjustment received in 2023, but it is still a help for everyone receiving Social Security, and something you should be conscious of.
Increased Gift Limits
Many of us like to share our wealth with family, friends, or kids. It can be difficult to know what the limits are. In 2024, you can give up to $18,000 as a gift, as an individual without triggering tax for the recipient. That means that a couple could each give $18,000 dollars to the same person. Keep in mind that if you give more than $18,000 on an individual basis, you will have to file a 709 Gift Tax Return, so keeping under that limit gives you the best benefits.
These are just a few of the most important changes coming to your retirement plans in 2024! We go over these elements and more with our clients at REAP Financial to ensure they are proactive and not reactive in investments and tax planning. This allows them to maximize their potential headed into 2024 and beyond! If you want more information, download the free guide, 10 Retirement Tips, available on our website’s homepage at reapfinancial.com!
