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For financial planning in 2024, some key updates and numbers are important to note:
IRA Contribution Limits: The contribution limit for Individual Retirement Accounts (both Roth and traditional) has increased to $7,000. The catch-up contribution limit remains at $1,000.
401(k) Limits: The contribution limit for 401(k) plans has been raised to $23,000, with the catch-up contribution staying the same at $7,500.
Health Savings Account (HSA) Limits: For individuals with self-only High-Deductible Health Plan (HDHP) coverage, the HSA contribution limit is now $4,150, and for those with family HDHP coverage, it's $8,300.
Income Limits for Roth IRA Contributions: For single filers or heads of households, the phase-out range for Roth IRA contributions is between $146,000 and $161,000. For married couples filing jointly, the range is $230,000 to $240,000.
Traditional IRA Deductibility Limits: For single filers or heads of households eligible to participate in an employer retirement plan, the phase-out range for Traditional IRA deductibility is between $77,000 and $87,000. For married couples filing jointly, where both are eligible for an employer plan, the phase-out range is $123,000 to $143,000.
Income Tax Brackets and Rates: The tax brackets have been adjusted. For example, for single filers, the 10% bracket applies to income of $0–$11,600, and the top 37% bracket applies to income over $609,351.
Estate and Gift Tax Exclusions: The annual gift tax exclusion has increased to $18,000 per recipient. The lifetime gift and estate tax exclusion is now $13,610,000.
Flexible spending account: For the taxable years beginning in 2024, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200.
Medicare coverage: Medicare does not cover certain services and items, including routine eye care (like exams, glasses, or contacts), routine hearing tests and hearing aids, dental care (such as checkups, dentures, or root canals), routine foot care except for specific medical conditions, and long-term care in nursing homes or assisted living facilities, although it does cover limited stays in rehabilitation centers.
These updates reflect changes in contribution limits, tax brackets, and other financial thresholds that are crucial for effective financial planning in 2024. For detailed and personalized advice, it's recommended to consult a financial advisor or tax professional.
The information was sourced from T. Rowe Price​​, and irs.gov
Disclaimer:
The information provided here is for general and educational purposes only and is not intended to provide legal, tax, or investment advice. This material does not provide recommendations concerning investments, investment strategies, or account types; it is not individualized to the needs of any specific investor and is not intended to suggest any particular investment action is appropriate for you, nor is it intended to serve as the primary basis for investment decision-making.
Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or tax professional regarding any legal or tax issues raised in this material.
It's important to note that this information is based on current understanding and can change. For the most accurate and up-to-date information, it's recommended to consult a financial advisor or tax professional.
This disclaimer is a general statement and may not cover all the specific disclaimers from the sources used, which include T. Rowe Price​​ and IRS.gov​​. For detailed disclaimers, you should refer to the sources.