IRS Increases Retirement Contribution Limits for 2024

[Yawgoog]

401(k), etc.: $23,000 ($30,500 for people age 50+)

IRA: $7,000 ($8,000 for people age 50+)

https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000

[Jordan23ww]

Thank you for the info!

[SouthJamaica]

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@Yawgoog wrote:

401(k), etc.: $23,000 ($30,500 for people age 50+)

IRA: $7,000 ($8,000 for people age 50+)

https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000

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Welcome to the forum.

And thanks for the article.

[MarkintheHV]

It would be nice if they took the adjusted gross income requirement off of the IRA contribution.  I am a contractor with no 401k, so I contribute myself.  However, I found out a few years ago, if your adjusted gross income is >208k, and your spouse has a 401k, you dont get the IRA exemption.  I was shocked when I found that out.

[Yawgoog]

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@MarkintheHV wrote:

I am a contractor with no 401k, so I contribute myself. 

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You can create a self-employed 401(k), also known as a solo 401(k).

[K-in-Boston]

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@MarkintheHV wrote:

It would be nice if they took the adjusted gross income requirement off of the IRA contribution.  I am a contractor with no 401k, so I contribute myself.  However, I found out a few years ago, if your adjusted gross income is >208k, and your spouse has a 401k, you dont get the IRA exemption.  I was shocked when I found that out.

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Yes, unfortunately it's not just for 401k.  Any type of employer retirement plan that a spouse has prevents you from being able to deduct the IRA contributions.  I'm in the same boat.  While it's a bit of a headache, make sure that you are filing Form 8606 each year to track nondeductible IRA contributions so that you can at least get the credit on those distributions when you take them.  Otherwise, depending on your tax bracket and locale at time of contribution and distribution, you could be paying more than 100% combined tax on your retirement contributions!  😳

[Citylights18]

Right now I'm just contributing in the employer minimum for the match.

I think the S&P is trading pretty high right now. If the market was low I'd be more inclinded to contribute more.

Also the funds have restrictions. 401k loans have to be paid back in the following tax year. Lower limit to what you can contribute until age Penalties on withdraws if you lose your job until age 55.  Tax penalty on normal distribution until 59.5.

The scenario where its best to max out your contribution limit is if you are a renter and don't have tax advantaged real estate. Maxing out your 401k at least gives you something and will help you save for a home down payment quicker if you so choose to use a 401k loan which you can pay the interest back to yourself.