Current:Home > reviewsIRA limits in 2024 are rising. Here's what you need to know about tax savings. -WealthX
IRA limits in 2024 are rising. Here's what you need to know about tax savings.
View
Date:2025-04-16 02:24:52
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! (651)
Related
- $73.5M beach replenishment project starts in January at Jersey Shore
- Where You’ve Seen the Cast of Daisy Jones & the Six Before
- Poland to be first NATO country to provide fighter jets to Ukraine
- Why Tarek and Heather Rae El Moussa’s New Show is Not a Flip or Flop Redux
- Meet first time Grammy nominee Charley Crockett
- Transcript: Rep. Tony Gonzales on Face the Nation, March 26, 2023
- King Charles III visit to France delayed by protests as anger mounts over Macron's pension reforms
- Transcript: John Kirby on Face the Nation, March 26, 2023
- As Trump Enters Office, a Ripe Oil and Gas Target Appears: An Alabama National Forest
- You’ll Love Justin Timberlake’s Tribute to “Badass” Jessica Biel—This We Promise You
Ranking
- Justice Department, Louisville reach deal after probe prompted by Breonna Taylor killing
- Andy Cohen Addresses Tom Sandoval and Ariana Madix's Vanderpump Rules Breakup Scandal
- Hoda Kotb Reflects on Daughter Hope's Really Scary Health Journey After ICU Stay
- North West and Ice Spice Dance Together and Raid the Fridge in Home TikTok Video
- Bodycam footage shows high
- The Moving Trailer for Netflix's Emergency NYC Shows the Intense World of the City's Medical Pros
- Denmark invites Russian energy giant to help recover mystery object found near Nord Stream pipeline hit by sabotage
- History of the World, Part II: Ike Barinholtz Reveals Mel Brooks’ Advice on “Dirty Jokes”
Recommendation
Realtor group picks top 10 housing hot spots for 2025: Did your city make the list?
22 High-Waisted Bikinis That Will Help You Feel Your Best for Spring Break and Beyond
Alex Murdaugh Sentenced to Life in Prison for Murdering Wife and Son
Possible Jackson Pollock original painting discovered in Bulgaria police raid
'No Good Deed': Who's the killer in the Netflix comedy? And will there be a Season 2?
Khloe Kardashian and Daughter True Thompson Reveal Their Rapping Skills
QVC Hosts Carolyn Gracie and Dan Hughes Exit Shopping Network After 19-Plus Years
Israeli doctors walk off the job and more strikes are threatened after law weakening courts passes