In this video, I dive into the 2024 retirement plan contribution and income limit changes recently unveiled by the IRS. Discover how these changes impact various retirement plans and learn strategies to maximize your retirement savings. From 401K to Roth IRA, I break down the numbers and provide insights to help you make informed financial decisions. Plus, I show you how to calculate your contributions on a monthly, bi-monthly, bi-weekly, and weekly basis, ensuring you’re on track for a secure retirement. Don’t miss this essential update for 2024 – start saving early and secure your financial future today!
0:00 Intro
0:15 Retirement Plan Contribution and Income Limits 2024
0:25 401k, 403b, 457, and TSP Limits
0:58 Solo 401k
1:01 SEP IRA
1:24 IRA Income Limits
2:58 Roth IRA Income LImits
4:03 SIMPLE IRA
4:16 Savers Credit
4:40 Max Retirement Plan Savings
5:41 Roth IRA Max
6:13 SUPER SAVERS
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UPDATE: Increased 401k and IRA Retirement Plan Contribution and Income Limits 2024
As we approach the new year, it’s important for retirement savers to be aware of any changes to contribution limits and income thresholds for retirement plans. For 2024, the Internal Revenue Service (IRS) has announced increases to the contribution limits for 401(k) and IRA retirement plans, as well as adjustments to income limits for eligibility.
Starting with 401(k) plans, the contribution limit for 2024 has been raised to $21,000, up from $20,500 in 2023. This means that employees who participate in a 401(k) plan can now contribute up to $21,000 of their pre-tax salary to their retirement account. For those aged 50 and older, the catch-up contribution limit remains unchanged at $6,500, allowing them to contribute a total of $27,000 for the year.
On the other hand, the contribution limits for IRA retirement plans have also been increased for 2024. The limit for traditional and Roth IRAs has been raised to $7,000, up from $6,000 in 2023. This includes a catch-up contribution limit of $1,000 for individuals aged 50 and older, allowing them to contribute a total of $8,000 for the year.
In addition to the changes in contribution limits, the IRS has also adjusted the income limits for eligibility to contribute to IRA plans. For single individuals covered by a workplace retirement plan, the income phase-out range for making deductible contributions to a traditional IRA has been increased to $66,000 – $76,000, up from $65,000 – $75,000 in 2023. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the income phase-out range has been raised to $105,000 – $125,000, up from $104,000 – $124,000 in 2023.
It’s important for individuals to be aware of these updates, as maximizing contributions to retirement plans can have a significant impact on their long-term financial security. By taking advantage of the increased contribution limits, individuals can boost their retirement savings and take advantage of the tax benefits that come with these accounts.
For those who may be affected by the changes in income limits for IRA eligibility, it’s important to consult with a financial advisor to determine the best course of action. There may be alternative retirement savings options available for individuals who are no longer eligible to make deductible contributions to a traditional IRA.
In conclusion, the increased contribution limits for 401(k) and IRA retirement plans, as well as the adjusted income limits for IRA eligibility, offer individuals the opportunity to bolster their retirement savings and take advantage of tax benefits. It’s important for retirement savers to stay informed about these changes and consider making adjustments to their savings strategy for the upcoming year. By maximizing contributions to their retirement accounts, individuals can set themselves on a path towards a more secure financial future in retirement.
Becoming a millionaire through a Roth IRA or a 401(k) involves different strategies for maximizing profits. A Roth IRA offers tax-free withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later in life. On the other hand, a 401(k) provides tax-deferred growth and potential employer contributions, boosting your savings. The optimal choice depends on factors like your current and future tax situation, employer match, and investment options. Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.
Do the income limits reflect total gross earnings? Or is it your AGI (after 401k is deducted from total gross earnings?) Thank you for your videos! Very helpful.
Hi Travis, looking for clarification on W2 wages paid as an S-Corp and solo 401k employee (Salary deferral) contributions. I had a simplistic understanding that for 2023 with a $50K W2 salary, I could make $22500 employee contribution and then a $12500 employer contribution. It seems that those numbers are not cut-and-dry calculations since there are some changes to income when factoring in deductions for SE/FICA taxes etc… So is the INCOME number used to determine max 401k contributions the $50k salary or whatever is calculated after the aforementioned adjustments? Also, I haven't made any employee contributions throughout 2023 (through payroll) but was planning to do a lump-sum contribution after fiscal year ends. If I've already paid the full $50K in W2 salary but 12/31/2023, does that mean I can't make any employee contributions? Somebody just explained to me that employee contributions must be withheld from W2 income, meaning that the amount you contribute as an employee to a solo 401k you WOULD NOT get paid in W2 wages…but I will have paid out the full $50k in W2 wages. Thank you so much for shedding some light unto my cloudy comprehension.
Bimonthly means every 2 months. Think what u meant was semi-monthly
I’m a dividend investor, My wife and I have invested in the S&P500, both through my TSP with the government, and through fidelity in her 401-k. Cashed out 270k from the S&P and invested with a Financial adviser, Monica Mary Strigle and we also bought Solana at the right time. Until around 3 years ago we were 100% in the s&p after over 30 years. I’m retiring at the end of this month at 62, while my wife will retire next year at 60. We currently have 3.7 million in our tax deferred savings. I am putting this out there for anyone looking for how to help themselves in this time of crisis.
Travis- I hope you can help me.
I opened a Robinhood Traditional IRA. I am retired and not working. No working income. I now understand that you can't contribute without working. It's only $1000,
1- can I clam this for 2024? I will be working PT.
2- cash it out? Cancel it.
Advise ? Thanks
谢谢！
Hello Travis, I have a question regarding the solo k contribution that hope you can answer. Assuming a taxpayer only has $20k Net Earnings for his self-employed job. My understanding is that he is able to make the "employee portion" contribution up to $20,000. How about the employer's profit sharing? If we use the 20% of net earnings, then the overall contribution will be higher than the net earnings itself ($20K + some number). Is that ok to do so? Thanks a lot
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. Compounding is the process of earning interest on your initial investment, as well as on the interest that investment earns. This means that over time, your investment can grow exponentially. So the earlier you start investing, the more time your investment has to grow through compounding.
Catch up is only n Roth 401k right… you missed that point.
I would like to build a financial model of this stuff in excel for an MBA class, with 2 cases: s corp and non s corp llc. Taxes AND retirement contributions. Can you recommend a resource that will show me all the math in detail? Textbook? Subscription website? IRS handbook? Really just need the s corp Bible with all the calcs laid out.