In 2024, the IRS has increased the 401(k) contribution limit to $23,000. This increase, applicable to 457, 403(b), and the Thrift Savings Plan, allows for greater retirement savings.
IRA contributions and catch-up limits
The annual IRA contribution limit is now $7,000. For those over 50, the SECURE 2.0 Act keeps the catch-up limit at $1,000. Moreover, the catch-up limit for 401(k), 403(b), and certain 457 plans remains $7,500, enabling a total contribution of $30,500 for older participants.
A summary of major changes
2024 introduces many retirement plan changes, including:
- Penalty-free withdrawals: A new rule allows a single penalty-free withdrawal of $1,000 from retirement plans for urgent financial needs.
- Emergency savings accounts: Employers can now offer post-tax funded Emergency Savings Accounts within defined contribution plans.
- 529 plan rollovers to Roth IRAs: Assets in a 529 plan, held for at least 15 years, can now be rolled over tax-free to a Roth IRA.
- Early withdrawals in cases of domestic abuse: The IRS now permits certain penalty-free early withdrawals for domestic abuse survivors.
Best practices for maximizing your retirement savings
Always aim to maximize your retirement contributions, taking full advantage of employer matches. For those without employer plans or who are self-employed, consider setting up SEP or SIMPLE plans. For personalized advice tailored to your unique financial situation, consider speaking with a Signet advisor. Our professional guidance can help you navigate these new rules and optimize your retirement savings strategy.