You may want to bookmark this blog. We’re talking about retirement account contribution limits — and what you read today can help you outline the big goals you have for bumping up your retirement savings efforts in 2024. As the year unfolds, check back to monitor your progress. If you fall off the savings train — revisiting your goals is a great way to regain the momentum you started the year off with.
While many will invest in the stock market by purchasing mutual funds and stocks, where no limits exist, most of us are familiar with retirement-specific accounts that come with added rules and regulations. These rules are in place because the accounts reward us for saving, which must be capped.
The rewards come as tax-saving incentives. To make the most of these opportunities, it's essential to stay informed about the contribution limits for different retirement accounts. In this blog, we’ll explore the contribution limits for 2024 for common retirement accounts, such as 401(k)s, IRAs, and Thrift Savings Plans, along with other common tax-advantaged accounts like HSAs.
401k Contribution Limits
Traditional and Roth 401(k)s
The 401(k)is a popular employer-sponsored retirement plan that allows employees to contribute a portion of their salary to their retirement savings, often with an employer match. In 2024, the contribution limits for 401(k) accounts remain generous, offering individuals an excellent opportunity to save for retirement efficiently.
The annual contribution limit for pre-tax and Roth 401(k) accounts is $23,000 — this is a $500 limit increase from 2023.
If you are age 50 or older, you can make an additional catch-up contribution of $7,500, bringing your total contribution limit to $30,500.
It's important to note that these limits apply to individual contributions and do not include any employer contributions or matches.
The same limits apply to 403(b), 457, and Thrift Saving Plans.
IRA Contribution Limits
Traditional and Roth IRAs
Individual Retirement Accounts (IRAs) provide another excellent avenue for retirement savings. There are two main types of IRAs: Traditional and Roth. Here are the 2024 contribution limits for each:
The annual contribution limit for both Traditional and Roth IRAs is $7,000. Like the 401(k), this also saw a $500 bump for 2024.
Individuals aged 50 and older can make an additional catch-up contribution of $1,000.
The contribution limits apply collectively to all your IRA accounts. For example, if you have both a Traditional and a Roth IRA, your total combined contributions to both accounts cannot exceed the annual limit.
Health Savings Account (HSA) Contribution Limits
While HSAs are primarily intended for medical expenses, they can serve as a valuable retirement savings tool. In 2024, the annual contribution limits for HSAs are:
Individuals with self-only coverage can contribute up to $4,050 in 2024.
Individuals with family coverage can contribute up to $8,100 in 2024.
While not new, HSAs continue to provide valuable tax-saving advantages: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free.
After age 65, you can withdraw funds for non-medical purposes without a penalty but standard income taxes will apply in this scenario.
Staying Informed and Consulting a Financial Advisor
Will you max out an IRA this year? Are you contributing enough to a 401(k) to get the company match? Did you learn something new — many are unaware there are limits to how much you can deposit into a work-sponsored retirement account each year.
Understanding the contribution limits for retirement accounts in 2024 is essential for effective retirement planning. It’s also important to note there are many investment opportunities beyond what we’ve outlined in this blog, and it’s perfectly normal to have goals and plans outside of these savings tools.
While we outlined 2024 contribution guidelines, these limits can change from year to year due to inflation adjustments and legislative updates. Therefore, it's crucial to stay informed about any changes that may affect your retirement savings strategy.
As financial advisors, it's our responsibility to keep our clients informed about the latest contribution limits and help them make the most of their retirement accounts. This is one piece of the puzzle when it comes to developing a comprehensive retirement plan.
While we’ll always encourage staying in the know, as Certified Public Accountants, you can lean on us when it comes to staying on top of tax law changes. There are many complexities associated with minimizing your tax bill over your retirement years, that’s why we’re here. For today, we hope reviewing the updated 2024 contribution limits motivates you to focus on making consistent contributions to your retirement nest egg this year.
About Integrated Wealth Management
Integrated Wealth Management is owned by Burt Hutchinson, CPA, CFP®. We’re a CPA-led organization, meaning we’re here to handle your complex tax scenarios and provide cost-saving insight related to your financial plan.
We’re here to guide you through the 3 stages of retirement:
Uncertainty Stage: When you are within 10 years of retirement and have questions about how to make it work
Stability Stage: When you have reached the financial milestone to retire comfortably and confidently
Reflection Stage: When you are looking to leave a legacy
We are also here to provide experienced, empathetic support during times of loss, such as the death of a life partner. You need confidence and a sense of security to enjoy retirement. As fiduciaries with a fee-only structure, we never receive commissions. Free of ulterior motives, you can be sure we’re focused on your goals.
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Disclosure Statement:
This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax, or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, Past performance is not a guarantee of future results.