ARI BAUM, CFP®
In 2024, let’s explore the exciting opportunities that await you with the latest updates in Individual Retirement Accounts (IRAs), 401(k)s, and the transformative power of gift contributions.
Supercharged Savings with the New IRA Rules
The dawn of a new year brings with it new possibilities, and for savvy investors, the updated rules surrounding Individual Retirement Accounts (IRAs) present an exciting opportunity. As of 2024, the annual contribution limit for IRAs has been increased to $7,000, allowing you to turbocharge your retirement savings. Whether you opt for a Traditional IRA with tax-deferred contributions or a Roth IRA with tax-free withdrawals in retirement, these updated limits mean you can now contribute more than ever before.
Additionally, keep an eye on the catch-up contributions if you’re 50 or older. The extra contribution allowance of $1,000 gives those in the second half of their careers an added advantage in boosting their retirement nest egg. So, seize the moment and take advantage of these increased limits to ensure a financially secure future.
401(K) REVOLUTION ELEVATE YOUR RETIREMENT GAME
Your workplace 401(k) is a powerful tool for building long-term wealth, and 2024 brings exciting changes that can elevate your retirement game. Employers are increasingly recognizing the importance of supporting their employees’ financial well-being, and this is reflected in the updated 401(k) contribution limits.
With the increased annual contribution limit to $23,000 you now have the opportunity to stash away more pre-tax dollars, reducing your taxable income for the year. If you’re over 50, your eligible for an additional $7,500 in catch up contributions, raising your employee contribution to $30,500! It’s a win-win situation: you save more for your future, and you may also enjoy a lower tax bill today.
But that’s not all — many employers offer matching contributions as part of their 401(k) plans. Make it a goal to maximize this employer match. It’s essentially free money that can significantly accelerate the growth of your retirement savings. So, review your workplace retirement plan, adjust your contributions accordingly, and set yourself up for a financially prosperous retirement.
THE GIFT OF FINANCIAL FREEDOM MAXIMIZE GIFT CONTRIBUTIONS
While the focus often leans towards personal contributions, don’t underestimate the impact of gift contributions. In the coming year, the IRS sets the annual gift tax exclusion to $18,000 per recipient tax-free without using up any of the taxpayer’s lifetime gift and estate tax exemption. For married couples, this means that they can give $36,000 pere year per recipient.
For example, if a married couple has five children and five grandchildren, they may transfer $360,000 in 2024 to their descendants without touching their combined lifetime gift tax exemption, thus allowing them to transfer further substantial assets gift-tax-free. Not only are the assets removed from the taxpayers’ taxable estates, the assets’ future appreciation also avoids gift and estate taxes. The gift tax exclusion allows you to give a certain amount to as many individuals as you wish without incurring any gift tax.
Moreover, this may encourage the concept of financial literacy within your family. Use the opportunity to educate your loved ones about the importance of retirement planning, the power of compounding, and the benefits of long-term investing. This not only fosters a culture of financial responsibility but also strengthens the bonds within your family as you collectively work towards a brighter and more secure future.
DIVERSIFY AND CONQUER SMART INVESTMENT STRATEGIES
As you embark on this financial journey, remember that it’s not just about contributing more — it’s also about contributing wisely. Diversify your investment portfolio to mitigate risks and maximize returns. Explore new investment opportunities, stay informed about market trends, and consider consulting with a financial advisor to tailor your investment strategy to your specific goals and risk tolerance.
In the dynamic landscape of financial markets, staying informed is key. Embrace the new year with a commitment to financial education, attending workshops, webinars, or reading up on the latest financial literature. Arm yourself with knowledge and make informed decisions that align with your long-term objectives.
A PROSPEROUS NEW YEAR AWAITS
Let New Year’s Day symbolize not only the end of one year but the beginning of a new and improved financial chapter in your life. Embrace the enhanced contribution limits for IRAs and 401(k)s and consider the impactful gesture of gift contributions. Your future self — and your loved ones — will thank you for the thoughtful and strategic financial decisions you make today.
Remember, the journey to financial freedom is ongoing, and each new year brings fresh opportunities to grow, learn, and prosper. With the right mindset, informed decisions, and a commitment to securing your financial future, 2024 can be the year you set the stage for a lifetime of prosperity. Here’s to a new year, a new you, and a financially empowered future!
This content was developed from sources believed to be providing accurate information. Investing involves risk including the potential loss of principal. This information is not intended to be a substitute for specific individualized tax or legal advice. Consult with a licensed professional regarding your specific situation.
Partners, with over 25 years of experience in the Financial Services industry. He brings his in-depth experience to Conceive. Believe. Achieve. for his clients.
Securities and Advisory services offered through Prospera Financial Services Inc. Member FINRA/SIPC.
Brokerage and Advisory accounts carried by Wells Fargo Clearing Services, LLC.
