The new year brings significant changes to IRA, 401(k), and H.S.A. plans. These changes address the financial challenges many Americans encounter in their retirement planning. The changes, though seemingly modest, hold great importance. Various reports reveal that a most of the U.S. population either falls behind in retirement savings or lacks awareness of their retirement status.
Adjustments in Required Minimum Distributions (RMDs):
– For 2023, the IRS has significantly reduced the penalty for not taking an RMD from 50% to 25% of the RMD amount not withdrawn.
– Moreover, if someone withdraws the required RMD amount and submits a corrected tax return promptly, the penalty further decreases to 10%.
Employer 401(k) Contribution Limits:
– The IRS has increased the 401(k) contribution limit to $23,000 for 2024, up $500 from the 2023 limit of $22,500. The Solo 401(k) has a contribution limit increase. In 2024 you can contribute the lesser of 25% of income up to a cap of $69,000. That’s up from $66,000 in 2023.
Emergency Withdrawals from Retirement Accounts:
– A new rule in 2024 allows individuals to withdraw up to $1,000 annually from their 401(k) plans or IRAs for emergency expenses without facing the usual 10% early distribution penalty.
IRA Contribution Limit Changes:
– The Traditional and Roth IRA contribution limits for 2024 will be $7,000, or $8,000 for those aged 50 or over, contrasting with the 2023 limits of $6,500 (under age 50) and $7,500 (age 50 or older).
SEP-IRA Employer Contribution Caps:
– The 2024 cap for employer contributions to an employee’s SEP-IRA is the lesser of 25% of the employee’s compensation or $69,000, an increase from the 2023 cap of $66,000.
SIMPLE IRA Adjustments:
– The 2024 Simple IRA plan raises the annual deferral limit to 110% of the indexed plan limit and increases the catch-up contribution limit at age 50 to 110%, specifically for employers with no more than 25 employees.
Health Savings Account (H.S.A.) Changes:
– The H.S.A. will see a change in 2024, with the maximum contribution set at $4,150 for individuals and $8,300 for families, plus an additional $1,000 for those 55 and older. This marks an increase from the 2023 limits of $3,850 for individuals and $7,750 for families.
Conclusion:
These changes to IRA, 401(k), and H.S.A. plans mark significant advancements in retirement planning and savings. Raising contribution limits and easing penalties on distributions serve as vital support for Americans working towards a secure financial future.
For answers to all your self-directed account questions, feel free to contact us at uDirect IRA Services, LLC at info@uDirectIRA.com.
