In this episode of "Inside the Plan with the 401(k) Brothers", hosted by Bill and Andy Bush, the hosts provide insight about the contribution limits of 2024 to know what you're getting into for the upcoming year which IRS announce every year around this time.
• 01:04 Discussion on inflation-indexed contribution limits, highlighting that most plans saw an approximate $500 increase from 2023 to 2024, with 401K plans moving from $22,500 to $23,000.
• 02:13 No change in catch-up contributions for 2023 and 2024, remaining at $7,500, leading to a total limit of $30,500 for eligible participants in 401K, 457, and certain 403 B plans.
• 04:10 Individual IRA limits also rose by $500 to $7,000 for 2024, and the catch-up contribution remained at $1,000, totaling an $8,000 potential contribution for those turning 50.
• 05:08 Eligibility for contributing to a Roth IRA in addition to a 401K depends on modified adjusted gross income (AGI). In 2024, single individuals earning less than $146,000 or married couples filing jointly earning less than $230,000 can contribute to both.
• 06:49 For traditional IRAs, if you're covered by a retirement plan at work, the deductible contribution income limits are lower: less than $77,000 for singles and less than $123,000 for married filing jointly.
• 07:23 Contributions to a traditional IRA without tax deductions must be tracked as after-tax contributions to ensure taxes are not paid upon withdrawal for the contribution amount.
• 08:52 The hosts reflect on the tendency of individuals to focus on financial planning towards the end of the year, emphasizing the importance of progress towards a secure financial life.
• 11:22 The hosts suggest stepping back to gain perspective on one's financial journey and the importance of planning, rather than only dealing with day-to-day needs.
• 12:53 The hosts discuss the passport package for self-assessment, highlighting different mindsets between those under and over 45 years of age. The assessments are based on the work of Carol Dweck on growth versus fixed mindsets.
• 14:22 They introduce the Horizon Financial Group's website where listeners can take the passport assessments – 'Expansion Passport' for those under 45 and 'Walkaway Passport' for those over 45.
• 15:56 The hosts encourage listeners to step back from daily life and evaluate their mindsets, suggesting this tool can aid in identifying areas for growth.
1. For 2024, the contribution limits for 401K plans have increased by $500 from the previous year, now standing at $23,000, with the catch-up contribution remaining at $7,500, making a total of $30,500 possible for those eligible.
2. Individuals with a modified AGI below specific thresholds can contribute to a Roth IRA in addition to their 401K.
3. The hosts emphasize the importance of assessing one's financial mindset and introduce a self-assessment tool called the passport package, which helps individuals gauge their financial health and progress towards goals, with distinct versions for those under and over 45 years of age.
• "Get ready for 2024! Most 401(k) plans are upping the ante with contribution limits increasing by about $500. Time to max out your financial growth!”
• "Whether you're aiming for a Roth IRA or sticking to traditional, knowing your AGI can unlock new opportunities for your retirement contributions in 2024.”
• "End the year strong by reflecting on your financial journey. Take the 'passport' to assess your mindset – are you growing or just going with the flow?”