The IRS announced new dollar limitations on benefits and contributions under qualified retirement plans for 2024!
The Internal Revenue Code’s recent adjustments for 2024 encompasses various adjustments that could impact your financial planning for the coming year. The modifications, influenced by the cost-of-living adjustments, seek to cater to evolving financial landscapes and ensure that the limitations remain relevant and effective.
Here's a breakdown of the 3 key changes you should be aware of:
- Exclusion of elective deferrals: The exclusion of elective deferrals is increased to $23,000 (from $22,500) under section 402(g)(3). Catch up contribution for over 50 years old remains $7,500, as in previous year.
- Increased Annual Benefit Limits: The annual benefit limitation under a defined benefit plan has been raised to $275,000 (from $265,000) under Section 415(b)(1)(A) of the Code, effective from January 1, 2024.
- Adjusted Contribution Limits: For defined contribution plans, the limitation has been adjusted to $69,000 (from $66,000) under Section 415(c)(1)(A).
Understanding these changes is essential for effective retirement planning. By keeping track of the modified limitations and adjusting your contributions accordingly, you can ensure that you make the most of the available benefits within the new parameters.
As always, it's advisable to consult a financial advisor or tax professional to better understand how these adjustments might impact your specific retirement plans and financial goals. Staying informed and proactive is key to making the most of your retirement savings and ensuring a secure financial future.
The Internal Revenue Service is committed to providing the necessary information to help taxpayers navigate these changes smoothly and make informed financial decisions.