The IRS recently announced the changes to the retirement contribution limits for 2024 for the various retirement account types. To make it simple, I’ve included a table of the limits below, including what you would have to contribute bi-weekly, bi-monthly, or monthly to hit the maximum limits if that’s a goal you/your advisor wants to try to achieve.
Most clients like to contribute to these accounts periodically. However, some clients may choose to max out their Roth/Traditional IRAs with one-time contributions. These contributions can be from bonus money received around the end of 2023 / beginning of 2024, brokerage account funds, an inheritance, or other cash inflow. As a reminder, you have until the tax filing deadline (April 15, 2024, for the 2023 tax filing year) to contribute to a Traditional and Roth IRA. For employer-sponsored retirement plans, most deadlines are at the end of the calendar year. This means you’re limited to making contributions that go through payroll, and generally, the last pay of the year is based on the date you’re paid, not the dates the work was completed.
As part of the Secure Act 2.0 that was passed at the end of 2022, there was a provision that was going to force those 50 and older with higher incomes to make catch-up contributions to Roth 401(k), 403(b), etc. accounts. That was initially scheduled to take effect in 2024. The IRS announced on August 25, 2023, that this rule will have an “administrative transition period” that will delay this from taking place until 2026.
There are income limits based on your Modified Adjusted Gross Income (MAGI) for making contributions to Roth and Traditional IRAs, so you should consult your accountant or schedule a consultation with Kage Rush to discuss whether you are close to or over these ranges.
Every client situation is different, so you should discuss your cash flow needs with your Whitaker-Myers advisor for retirement goals and other non-financial / financial goals. This should also include a conversation about your sinking funds for a car, home improvement, etc.
Planning Ahead – 2024 Retirement Contribution Limit Changes
December 7, 2023
Andrew Young
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