Current:Home > MyIRA limits in 2024 are rising. Here's what you need to know about tax savings. -OceanicInvest
IRA limits in 2024 are rising. Here's what you need to know about tax savings.
View
Date:2025-04-14 02:16:53
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! (78581)
Related
- Krispy Kreme offers a free dozen Grinch green doughnuts: When to get the deal
- Moo Deng casts her 'vote' in presidential election. See which 'candidate' she picked.
- In this Florida school district, some parents are pushing back against a cell phone ban
- Entourage Alum Adrian Grenier Expecting Baby No. 2 With Wife Jordan Roemmele
- Former Syrian official arrested in California who oversaw prison charged with torture
- NBA trending up and down: What's wrong with Bucks, Sixers? Can Cavs keep up hot start?
- With Republicans Claiming the Senate and Possibly the House, Congress Expected to Reverse Course on Climate
- Meet Vice President-Elect JD Vance’s Family: His Mamaw, Wife, Kids and More
- Brianna LaPaglia Reveals The Meaning Behind Her "Chickenfry" Nickname
- Watch this young batter react to a surprise new pitcher
Ranking
- Sonya Massey's father decries possible release of former deputy charged with her death
- In a south Georgia town racked by legal conflict, an election didn’t end until 3:50 am
- Pioneer of Quantitative Trading: Damon Quisenberry's Professional Journey
- Louisiana lawmakers return to Capitol for special session focused on tax reform
- Can Bill Belichick turn North Carolina into a winner? At 72, he's chasing one last high
- Tori Spelling Awkwardly Reminds Brian Austin Green They Had Sex
- DZ Alliance: Taking Action for Social Good
- AP Race Call: Nevada voters approve constitutional amendment enshrining abortion rights
Recommendation
Most popular books of the week: See what topped USA TODAY's bestselling books list
Watch this young batter react to a surprise new pitcher
Appeals court orders new trial for man on Texas’ death row over judge’s antisemitic bias
It might be a long night: Here are some stories to read as we wait for election results
Have Dry, Sensitive Skin? You Need To Add These Gentle Skincare Products to Your Routine
AP VoteCast takeaways: Gender voting gap was unremarkable compared with recent history
Trump snaps at reporter when asked about abortion: ‘Stop talking about that’
Elmo, other Sesame Street characters send heartwarming messages ahead of Election Day