As we enter 2024, many people are focused on making resolutions and setting new goals for self-improvement, and it’s the perfect time to reevaluate your goals for retirement savings. 

In looking back on the previous year and your approach to retirement planning, did you save as much as you could? Did you contribute enough to your company retirement plan to receive the maximum employer matching amount? 

The IRS recently issued Notice 2023-75, unveiling the latest cost of living dollar limits. Understanding these changes can help you plan for the future and could be just what you need to give your retirement plan a boost. 

401(k)/403(b)/457/SARSEP Plans. The employee deferral contribution limit increased from $22,500 in 2023 to $23,000 in 2024, while the employee catch-up contribution limit for individuals aged 50 or over remains flat at $7,500. 

SIMPLE Plans. The SIMPLE (Savings Incentive Match Plan for Employees) IRA/401(k) contribution limit increased from $15,500 in 2023 to $16,000 in 2024, while the contribution limit for individuals aged 50 or over remains flat at $3,500. 

SEP Plans. The maximum compensation amount increased from $330,000 in 2023 to $345,000 in 2024, while the minimum compensation amount remains flat at $750. 

IRA and Roth Contributions. Contributions to IRAs and Roth IRAs increased from $6,500 in 2023 to $7,000 in 2024, while the catch-up contribution limit for individuals aged 50 or over remains flat at $1,000. 

Highly Compensated Employee Definition. The definition of a highly compensated employee is (1) greater than 5% owner, (2) lineal ascendant/descendant of the greater than 5% owner, (3) an employee with compensation greater than $155,000 in 2024 or (4) a top paid group (top 20% of employees by compensation upon election of a plan sponsor).  

Key Employee Definition. The definition of a key employee is (1) greater than 5% owner, (2) 1% owners with at least $155,000 in compensation, (3) lineal ascendant/descendant of the greater than 5% owner or (4) officer with compensation greater than $220,000 in 2024. 

Annual Limitations. The annual benefit for defined contribution plans increased from $265,000 in 2023 to $275,000 in 2024. The annual contribution for defined contribution plans increased from $66,000 in 2023 to $69,000 in 2024. With the $7,500 catch-up for individuals aged 50 or over, the annual contribution is now $76,500 in 2024. 

Testing Facts. The annual maximum compensation limit increased from $330,000 in 2023 to $345,000 in 2024, while the highly compensated employee compensation threshold increased from $150,000 in 2023 to $155,000 in 2024. The Social Security taxable wage base increased from $160,200 in 2023 to $168,600 in 2024. 

It’s never too early to begin planning for retirement, and the new year brings an opportunity to take a fresh start. Reach out to us, and we'll be more than happy to discuss your options for maximizing your retirement savings. 

Source: Voya 2024 Cost of Living Adjustments Announced

Retirement plan withdrawals may be subject to taxation and penalties when withdrawn early.