There’s good news for savers in workplace retirement plans. The IRS has just announced that savings limits on retirement account contributions will increase due to adjustments for inflation.
Here are the details:
|Contribution Type||2023 Limits||2024 Limits|
|401(k), 403(b), 457(b) plan contributions||$22,500||$23,000|
|Catch-up Contributions (for those age 50 and older)||$7,500 ($30,000)||$7,500 ($30,500)|
|IRA Catch-Up Contributions (for those age 50 and older)||$1,000||$1,000|
Employer sponsored retirement plans will now allow a maximum contribution of $23,000 in 2024 (plus $7,500 catch-up contribution if over age 50). IRA contributions will also increase to $7,000 for 2024, while maintaining the same $1,000 catch-up provision from the prior year.
If you are looking to max out your available retirement accounts, adjust carefully. If you contribute too much too early you may miss out on employer matching contributions later in the year. Your Francis financial planner can help determine what your savings rate should be in 2024 to ensure you receive as much employer contributions as possible.
If you’re someone who is struggling to increase your retirement contributions, consider utilizing the auto-increase feature within your retirement plan. This is an easy way to automate the process of increasing your contributions without you having to manually do the work. A good time to set your increase is at the same time your cost-of-living adjustment (COLA) takes place for your paycheck. Increasing your savings rate the same time as your COLA means you likely won’t see any impact on your take-home pay.
Even if you’re behind in your retirement savings, any action you take now can have a positive impact on what your future years will look like. As the saying goes:
“The best time to plant a tree was 20 years ago. The next best time is today.”
Looking for motivation to get started? The judgement free financial planners at Francis LLC are here to listen to your personal situation and help create a customize plan to help you achieve your personal and financial goals. Schedule a meeting today to strengthen your Work-Life-Money Balance.