2024 IRS contribution limits increase
Educators, you can boost your retirement savings and lower your taxes with your 403(b) retirement plan and catch-up contributions.
The IRS Retirement Plan Contribution limits increase in 2024.
In 2024, you will be able to save more for retirement in your 403(b) plan. The maximum contribution limit on elective salary deferrals will increase from $22,500 to $23,000.1 This delivers another opportunity for you to boost your retirement savings and reduce your tax burden.
Here are three more ways you can maximize your retirement savings efforts:
- Every bit helps: Consider increasing your plan contributions by just 2%. If life expenses have diverted some of your retirement savings attention to other priorities, now may be the time to catch up. Use this retirement calculator to see the impact of another 1-2% of income. You may be surprised to see what even a small increase can do. Calculator
- 15 Year Catch-Up Benefit: If you have at least 15 years of service at the same eligible 403(b) employer, your 403(b)-contribution limit of $23,000 can be increased by $3,000 in any taxable year (lifetime limit of $15,000). This is a great option for educators who have been with the same employer for a long time to increase their contributions and save more for retirement.
- Catch-Up for age 50+: Educators 50 and over at the end of the calendar year can make catch-up contributions of $7,000 annually. Catch-up contributions allow those closer to retirement to make up for lost time and increase their retirement savings significantly. For example, consider a 55-year-old who plans to retire in ten years. If she adds $7,500 in catch-up contributions until retirement, assuming a 6% annual return on her investments, her 403(b) value could be $102,000 more than without catch-up contributions.2
Use these tips and check with your Equitable Advisors Financial Professional to consider plans to save more this year.
1 Source: ssa.gove and Notice 2023-75at irs.gov.
2 This assumes a hypothetical 6% return and there are no withdrawals. Withdrawals are subject to ordinary income tax and, if made before age 59½, may be subject to an additional 10% federal income tax. This example is for illustrative purposes only and is not intended to represent an expected or guaranteed rate of return for any investment vehicle. This example does not take potential taxes, investment management fees or product-related charges into account. Your rate of return will vary. Amounts are fully taxable upon withdrawal and the accumulation values illustrated will be reduced, based on an individual’s tax rate. https://www.savingscalculator.org/
Equitable believes that education is a key step toward addressing your financial goals, and this discussion serves simply as an informational and educational resource. It does not constitute investment advice, nor does it make a direct or indirect recommendation of any particular product or of the appropriateness of any particular investment-related option. Your unique needs, goals and circumstances require the individualized attention of your financial professional. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstance from an independent tax advisor.
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