The U.S. tax code can be confusing, especially when considering the steady stream of changes that seem to appear each year.
In 2024, a slew of new rules could have an impact on your efforts to build a larger nest egg that will see you through your retirement years.
Following are a few important changes to keep in mind as you save for retirement this year so that you don't end up surprised.
Maximum contribution amounts for 401(k)s have gone up
For the 2023 tax year, the maximum amount individuals could contribute to a 401(k) or Individual Retirement Account was $22,500.
This year — effective January 1, 2024 — retirement savers can put up to $23,000 in pre-tax dollars into their IRA.
403(b)s, most 457s, and Thrift Savings Plans maximum contributions have gone up
While 401(k)s are among the most common types of savings plans, they aren’t the only retirement savings options available.
You may have also been stashing money away in a 403(b), 457, or federal Thrift Savings Plan. If so, the same limit increase applies: You may contribute an extra $500 to your savings account this year compared to 2023.
Maximum Roth IRA contributions have increased
Unlike money saved in traditional IRAs, cash set aside for a Roth IRA is taxed preemptively rather than when you cash it out in retirement.
Contribution limits are different for Roth IRAs than traditional accounts, and the max contribution amount for Roths has gone up by 7.6% to a total of $7,000 for the year.
Earn $200 cash rewards bonus with this incredible card
There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.
The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.
This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 19.74%, 24.74%, or 29.74% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.
The best part? There's no annual fee.
Starter 401(k) plans are an option for small businesses that can’t afford to offer employee matches
Small-business owners can’t always afford to offer their employees 401(k) plans with employer matches. The IRA’s new starter 401(k) plan functions like a typical 401(k), but it doesn’t require employer matches.
Its limits are also lower: Employees may contribute up to $6,000 a year plus an extra $1,000 once they’re over age 50.
Students paying off federal student loans are eligible for employer 401(k) matches
Before this year, employees who were working on paying off their student loans needed to contribute to a 401(k) to qualify for any sort of employer match.
Thanks to new legislation, SECURE 2.0, as long as employees are paying off debt related to “qualified student loan payments” (tuition, fees, books, and expenses), they may receive matching retirement contributions counted as “elective deferrals.”
The same rules that apply to a company’s 401(k) employer match now apply to student loan payments, giving student loan payers the chance to start saving money.
Trending Stories
There's no longer a 10% penalty for early withdrawals if you’ve experienced a financial emergency
Until this year, with very few exceptions, anyone withdrawing money from a 401(k) account before age 59.5 would have to pay a 10% penalty (on top of paying the taxes associated with the account).
However, with the 2024 changes, individuals are allowed to withdraw up to $1,000 a year if they or their families have experienced a financial emergency within the last year.
Based on the new rules, you don’t have to pay the 10% penalty as long as you pay the money back to the account within three years.
The 10% penalty is also waived for domestic abuse survivors
If an individual self-certifies that they were a victim of domestic abuse, they may make a withdrawal without paying the 10% penalty.
The total amount that may be withdrawn is either up to $10,000 or 50% of the total amount of money in the account — whichever sum is smaller.
Bottom line
IRS rules constantly change, and you need to stay on top of these shifting winds to avoid money stress when you retire. If you are unsure about how rules may be different in 2024, check in with your accountant.
Staying on top of these changes can help ensure you do not run afoul of IRS rules, you contribute the maximum to your nest egg, and you're able to supplement your social security.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.74%, 24.74%, or 29.74% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Subscribe Today
Want extra-cash moves to come right to you?
Stop browsing endlessly. Get proven ways to earn pocket money, help cover rent, and crush your debt — sent to your inbox daily.