2024 Retirement Changes: What You Need to Know

As we step into 2024, it’s vital for those planning for retirement to be aware of the significant changes implemented by the Internal Revenue Service and under the SECURE 2.0 Act of 2022. These changes, affecting 401(k) plans, IRAs, and other retirement-related items, are designed to bolster your saving efforts and provide more flexibility in how you prepare for retirement. Let’s review these updates and their implications.

Increased Contribution Limits

For those actively contributing to 401(k) plans, there’s good news. The annual contribution limit has been increased to $23,000, up from $22,500. This enhancement applies to 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan.

What Does This Mean for You?

This increase means you can now save an additional $500 per year towards your retirement. For those aged 50 and over, the catch-up contribution limit remains at $7,500, allowing for a total contribution of up to $30,500. This is a golden opportunity for individuals nearing retirement to boost their savings.

IRA Changes

In 2024, the IRA contribution limit has also seen an increase to $7,000, up from $6,500. This applies to both traditional and Roth IRAs, with the catch-up contribution limit fixed at $1,000.

Understanding Roth IRA Adjustments

Roth IRAs, known for their tax-free withdrawals and lack of Required Minimum Distributions (RMDs), are a crucial part of many retirement plans. The income phase-out ranges for Roth IRA contributions have also been adjusted, increasing to between $146,000 and $161,000 for singles and $230,000 to $240,000 for married couples filing jointly.

These adjustments present an opportunity to evaluate whether a Roth IRA fits into your retirement strategy, especially if you anticipate being in a higher tax bracket during retirement.

SIMPLE Retirement Accounts

Contributions to SIMPLE retirement accounts have been increased to $16,000, up from $15,500. This is particularly beneficial for employees of small businesses utilizing these accounts.

Adjustments to Saver’s Credit

The Saver’s Credit, aimed at low- and moderate-income workers, has seen an income limit increase. This change is designed to make it easier for more individuals to qualify for this valuable tax credit, which can significantly lower the tax burden for eligible savers.

Longevity Annuities and Charitable Contributions

For those considering longevity annuity contracts, the premium limitation remains at $200,000. Additionally, the deductible limit on charitable distributions from IRAs has increased to $105,000, and there’s a new limit for distributions made to split-interest entities, now at $53,000.

Planning Ahead with These Changes

These changes underscore the importance of proactive retirement planning. Whether you are just starting to save, in the middle of your career, or nearing retirement, these adjustments can significantly impact your strategy. It’s crucial to understand not only how much you can save but also where to allocate your retirement contributions for maximum benefit.

How We Can Help

At Lancaster Law Firm, we specialize in assisting clients with comprehensive retirement and estate planning. Our team is well-versed in the latest regulations and can help you navigate these changes to optimize your retirement savings and overall financial plan.

Whether you’re reevaluating your retirement contributions, considering a Roth conversion, or simply need guidance on how these changes affect your long-term financial goals, our experts are here to provide personalized advice.

Don’t let the complexity of retirement planning in 2024 overwhelm you. Contact Lancaster Law Firm today to schedule a consultation. We’ll help you understand these changes in detail and develop a strategy that aligns with your unique financial situation and retirement goals.