Current:Home > FinanceIRA limits in 2024 are rising. Here's what you need to know about tax savings.-InfoLens
IRA limits in 2024 are rising. Here's what you need to know about tax savings.
View Date:2024-12-23 10:58:13
If you want to enjoy your retirement to the fullest, then you'll need a nice amount of savings. Retiring on Social Security alone could mean having to cut corners as a senior, and after a lifetime of hard work, you deserve better.
Some people have access to a retirement savings plan through their employers. If you don't, you might be housing your retirement savings in IRAs, which offer a number of benefits over 401(k) plans. First of all, they tend to offer a wider range of investment choices.
With a 401(k) plan, you're generally limited to a bunch of different funds to invest in. You can't buy individual stocks.
IRAs, on the other hand, let you hand-pick stocks for your portfolio. And that gives you an opportunity to enjoy large gains and beat the broad market with the right investment strategy.
Also, the ability to choose stocks for your portfolio could make it possible to keep your investment fees low. And the lower those fees are, the less they'll eat away at your gains.
Meanwhile, this year, IRAs max out at $6,500 for savers under the age of 50 and $7,500 for those 50 and over. But next year, IRA contribution limits are going up. And that means you'll have an even greater opportunity to save for your future.
Opening a 401K:Here's what not to do to get you started
You can pump more money into your IRA in 2024
Once the new year rolls around, savers under the age of 50 will be able to put up to $7,000 into an IRA. The catch-up contribution for workers 50 and over is holding steady at $1,000. So this means that older workers will be able to contribute up to $8,000 to an IRA in 2024.
If you've been keeping track of IRA catch-up contributions, you might have noticed that the limit has held steady at $1,000 for a long time. The reason is that IRA catch-ups aren't subject to cost-of-living adjustments, hence the $1,000 limit staying as is.
Tax savings and more
The more money you're able to put into your IRA, the more retirement wealth you stand to build. Also, taking advantage of next year's higher contribution limits could benefit you from a tax standpoint.
Traditional IRA contributions go in tax-free. So if you're able to max out in 2024, you'll shield $7,000 or $8,000 of your income from the IRS.
Now, you might decide to save for retirement in a Roth IRA. In that case, you won't enjoy an immediate tax break on your contributions. But you'll get to benefit from tax-free investment gains and tax-free withdrawals during retirement.
Planning for retirement:3 harsh Social Security truths to consider
Plus, with a Roth IRA, you won't have to take required minimum distributions as a senior, whereas with a traditional IRA, you'll eventually be forced to draw down your savings. If you're interested in passing some wealth on to future generations, a Roth IRA is a good bet.
The fact that IRA contribution limits are rising in 2024 is a good thing. Take advantage if you're able to -- it could do a world of good for your retirement.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
Offer from the Motley Fool:The $21,756 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $21,756 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
veryGood! (29)
Related
- Some women are stockpiling Plan B and abortion pills. Here's what experts have to say.
- ‘Where’s Ronald Greene’s justice?': 5 years on, feds still silent on Black motorist’s deadly arrest
- The Purrfect Way Kate Bosworth Relationship Has Influenced Justin Long
- Florida sheriff's deputy seen fatally shooting U.S. airman in newly released body camera video
- A wayward sea turtle wound up in the Netherlands. A rescue brought it thousands of miles back home
- A reader's guide for Long Island, Oprah's book club pick
- Stock market today: Asian shares trade higher after Wall St rally takes S&P 500 near record
- Scores of starving and sick pelicans are found along the California coast
- College Football Playoff ranking release: Army, Georgia lead winners and losers
- Missouri’s GOP Gov. Parson signs bill to kick Planned Parenthood off Medicaid
Ranking
- Jennifer Garner Details Navigating Grief 7 Months After Death of Her Dad William Garner
- Candace Parker, Shaquille O'Neal share heartwarming exchange on 'Inside the NBA'
- Woman was living behind store's rooftop sign for a year with desk, flooring, houseplant
- ‘Where’s Ronald Greene’s justice?': 5 years on, feds still silent on Black motorist’s deadly arrest
- Keke Palmer Says Ryan Murphy “Ripped” Into Her Over Scream Queens Schedule
- See the 2024 Met Gala's best-dressed stars and biggest moments
- A Florida man is recovering after a shark attack at a Bahamas marina
- A school district removed Confederate names from buildings. Now, they might put them back
Recommendation
-
Can I take on 2 separate jobs in the same company? Ask HR
-
Olympic flame reaches France for 2024 Paris Olympics aboard a 19th century sailing ship
-
Utah avalanche triggers search for 3 skiers in mountains outside of Salt Lake City
-
Woman was living behind store's rooftop sign for a year with desk, flooring, houseplant
-
Martin Scorsese on the saints, faith in filmmaking and what his next movie might be
-
How Hailey Bieber’s Rhode Has Transformed My Super Sensitive Skin
-
All the Ways Hailey Bieber and Justin Bieber Hinted at Her Pregnancy
-
Maryland governor signs online data privacy bills