The IRS increases the amount that you can put away for retirement every year. Because of inflation, the increases are larger. That means you can save more of your money from the IRS – at least temporarily. Any money you put in a retirement plan that is deductible now will eventually be taxed when you pull it out in retirement.
Here are the changes in 2024 you should be aware of:
Limit Increases at a Glance
|Type of Retirement Plan||2024 Contribution Limit||2023 Contribution Limit|
IRA Contribution Limits 2024
Roth IRA Contribution Limits 2024
If you normally contribute to a Traditional or Roth IRA, the amount of your contribution has increased to $7,000 (that’s a $500 increase from 2023.) And if you are over the age of 50, you are allowed to contribute an additional $1,000 to your IRA (referred to as a catch-up contribution.) Keep in mind, if you make too much money you may not be allowed to fund an IRA. Please check with your CPA or Tax Preparer before you fund one.
401(k) 2024 Contribution Limits
401(k) contribution has increased to $23,000 and the catch-up contribution limit is up to $7,000. That means if you’re over 50, you can contribute a total of $30,000 to a 401(k) in 2024.
SIMPLE IRA Contribution Limits 2024
SIMPLE IRA contributions has increased to $16,000 and the catch-up contribution limit is up to $3,500. That means if you’re over 50, you can contribute a total of $19,500 to a SIMPLE IRA in 2024.
If you are self-employed or worked for multiple companies during 2024, you need to check with your CPA to make sure you don’t accidentally overcontribute to any of these retirement plans. Remember, the IRS allows you to save some of your money from tax, but not all of it. If you want to learn more about what the IRS has to say about it, you can look here.