Inflation and rising interest rates mean that many people may need to save even more for retirement than they thought. So, once again, the IRS has raised contribution limits for retirement plans, IRAs and other accounts for 2024.
These changes are outlined in IRS Notice 2023-75, but here are some of the highlights.
- Elective annual deferral limits for most employer-sponsored retirement plans will rise from $22,500 to $23,000.
- Annual catch-up contribution limits for 401(k), 403(b) and similar defined contribution plans remain the same as in 2023--$7,500.
- The annual compensation limit for calculating contributions will rise from $330,000 to $345,000.
- The annual aggregate contribution limit (the combined total of both employee contributions and employer matching and profit-sharing contributions) for most defined contribution plans is increasing from $66,000 to $69,000.
- Annual contribution limits for Traditional and Roth IRAs will rise from $6,000 to $6,500. Catch-up contributions, currently $1,000 per year, are not increasing.
- Contribution limits for Health Savings Accounts and Healthcare Flexible Savings Account will rise as well.
The table below displays most of the key changes for 2024.
1Employee deferrals to all 401(k) and 403(b) plans must be aggregated for purposes of this limit.
2Contributors must be age 50 or older during the calendar year.
3All compensation from a single employer (including all members of a controlled group) must be aggregated for purposes of this limit.
If you have questions about any of these limits, speak to your retirement plan sponsor or advisor or a financial advisor.
Dan Flanagan is a financial advisor and Partner at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 508.598.1082 or email@example.com
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