2024 Retirement Contribution Limits – Introduction
When you contribute to a retirement plan, such as a 401(k) or an Individual Retirement Account (IRA), you’re saving money for your future.
These contributions are often tax-deferred, which means you don’t pay taxes on the money you contribute until you withdraw it in retirement.
Every year, the IRS sets limits on how much you can contribute to these accounts, and in 2024, those limits have increased.
What Are the New Contribution Limits for 2024?
For 2024, the 401(k) contribution limit has been raised by £500, meaning you can now contribute up to £23,000 per year.
If you’re 50 or older, you can also make catch-up contributions, allowing you to contribute an additional £7,500 per year.
For IRAs, the contribution limit has increased to £7,000. However, unlike 401(k) plans, the catch-up contribution for IRAs remains the same at £1,000 for those aged 50 or older.
Who Benefits From These Increases?
These increased limits are great news for anyone saving for retirement. The more money you can contribute to a retirement account, the more tax-deferred growth you can enjoy.
For people nearing retirement age, catch-up contributions are especially helpful because they allow you to save more during the final years of your working life.
Why Are the Limits Increased?
The IRS adjusts contribution limits every year to keep up with inflation.
As the cost of living goes up, it’s important that people are able to save more for retirement to ensure they have enough money to live on in the future.
These adjustments help make sure that your savings don’t lose value over time.
2024 Retirement Contribution Limits – Conclusion
The increase in retirement contribution limits for 2024 gives people more opportunities to save for their future.
By taking full advantage of these higher limits, you can grow your retirement savings and ensure a more comfortable retirement.
Whether you’re just starting your retirement journey or catching up on savings, these increases are a positive change for everyone.
Final thoughts
If you have any queries about this article on the 2024 Retirement Contribution Limits, or US tax matters in general, then please get in touch.