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2024 Key Financial Figures
Since last week we discussed all the tax changes to be aware of for 2024, I thought it appropriate for me this week to touch on all the changes relevant to you for investment opportunities for 2024. Each year the IRS addresses inflation and all sorts of actuarial tables to determine the following year’s deferral amounts. Naturally, if you are able, I highly recommend making the adjustments to your personal savings/investment accounts.
For both a Traditional IRA and Roth IRA in 2023, the amount you can contribute is $6,500 plus an additional $1,000 catch-up if age 50 or older. For the coming year 2024, we are now allowed to contribute an additional $500 to either (Roth or Traditional) making your allocable amount a cool $7,000 each. One thing to note is that they didn’t adjust the catch-up provision so for 50-plus individuals you are still capped at an additional $1,000. Remember, for both types of IRA accounts you have until April 15th of the following year (tax deadline) to make a deductible contribution.
Everyone’s favorite retirement vehicle the 401(k) has a few changes coming as well. Remember, for our current year you can contribute $22,500 plus an additional $7,500 if 50 or older. Similarly, the powers that be have adjusted just the under-50-year-old contribution limit, and staying on the theme they did the same $500 that they allowed for IRA accounts. Meaning, for 2024 you can contribute $23,000 plus $7,500 if 50 or over to your 401(k) account. Worth noting these limits hold true for not just 401(k) plans but also for 403(b), 457(b), and Roth 401(k) plans as well.
Another nuance for 401(k) plans is the annual compensation limit used to determine essentially dollars that an employer can match on went up from $330,000 in 2023 to $345,000 in 2024. They’ve also increased the total dollars that can go into a qualified retirement plan from $66,000 to $69,000 in the coming year. This figure is the total dollars including your contribution, employers, and any profit sharing that you cannot exceed.
Health Savings Accounts–
If you’ve followed my writings through the years, you know my affinity for the ole H.S.A accounts. They are the only triple tax benefit account going and one should max out every year if possible. To that end, they are at it again moving the contributable amount to these fantastic vehicles to $8,300 with a $1,000 age 55 or older catch-up. If single or on an individual high deductible plan this cap is half or $4,150. This is a $550 dollar increase for your 2023 levels. What are you waiting for adjust those contributions would ya!
This one will be a bonus category as it doesn’t really fall into the investment category perfectly. That said there are changes coming here as well. In 2023, you were taxed for Social Security on the first $160,200 of income until you received that nice income bonus. For 2024, you are taxed for FICA on your first $168,600 of income before you get that nice reprieve.
While on this lovely topic for those 71 plus million people who are currently collecting Social Security benefits, you will receive a lovely 3.2% increase on your payments next year for the cost of living adjustment (COLA).
Each year I put out this list for your own edification. My hope is that you make the appropriate adjustments as soon as you are able to take advantage of as much of this as possible for your financial benefit. Certainly, we are here to help you sift through all the noise and strategize wherever necessary. That said, don’t hesitate as the sooner you can implement these things the easier your path will be. Plus, you won’t forget to do it!
As always hope you stay wealthy, healthy, and happy. Enjoy your holiday season!