Are you REALLY maxing out your retirement accounts?
Another year has come and gone and 2024 is now in full swing! As we are accustomed to hearing time and time again, tax laws have changed! What does this mean for you and keeping your financial house in order? Let’s dive into it.
New 401(k) and 403(b) MAX contribution limits:
For 2024 the Max contribution limit for both 401(k) & 403(b) accounts has been raised to $23,000. There is also a catch up amount for those over age 50 of $7,500 bringing your potential max contribution to $30,500.
2024 IRA contribution limits:
We have also seen a rise to both Roth and Traditional IRA contribution limits for 2024. This has been raised to $7,000 with a catch up amount for those over age 50 of $1,000 to allow for up to $8,000 in contributions. For those who are self employed or 1099 employees the SEP IRA contribution limit has also been raised to $69,000.
How to max out your retirement accounts:
Far too often do I have clients who believe they are maxing out their retirement accounts, when they are in fact not. This is especially true for those who participate in a 401(k) or 403(b) plan through their employer. Contributing what your employer will match is NOT THE SAME as maxing out your contributions. For example: Client A has been contributing 5% of their $100k salary into their Traditional 401(k) because their employer will match up to 5%. Client A has always believed that they are maxing out their contributions each year. In fact they have left up to $25,500 worth of contributions on the table. This can be a game changer for almost any client, but especially for those who need a tax deduction.
Let myself or anyone on the WSP team review your contribution amounts to make sure we are taking full advantage of all possible contributions for 2024!