Don’t Miss Out; Max Out

This article originally appeared in Aldrich Community, a client experience offering from Aldrich Wealth.

The phone rang, urgency palpable on the other end of the line. Prompted by a conversation with her neighbor, our client told us she needed to fund her IRA before yearend – it was 4:55 pm on New Year’s Eve.

In our line of business, opportunities are dictated by deadlines, so it’s our responsibility to be the bearers of bad news when a deadline has passed. Luckily, we were able to give this client some good news. Despite the calendar year coming to an end, IRAs remain open for funding until the tax deadline. This extended timeframe allowed our client several additional months to make a tax-deductible contribution for the previous year. This knowledge we shared gave her reassurance, which she then shared with her neighbor.

Another frequent question regarding IRAs and other retirement accounts is how much account owners can contribute. Limits vary by account type and age and are indexed annually for inflation, so we thought we’d kick off the new year with a list of refreshed 2024 limits.

• Individuals under age 50: $7,000
• IRA/ROTH IRA catch-up contributions (age 50+): additional $1,000

• Employees under age 50: $23,000
• Catch-up contributions (ages 50+): additional $7,500

HSA annual contribution limits also vary based on the number of individuals covered under the plan. These limits are the sum of employer and employee contributions.

• Self-only: $4,150
• Family (2+ covered individuals): $8,300
• HSA catch-up contributions (age 55+): additional $1,000

Note: only one catch-up contribution is allowed per plan annually

Retirement accounts provide great benefits for those who wish to save for their future. Like most good things, these accounts have some embedded restrictions beyond the contribution limits.

• Contribution cannot exceed earned income.
• If you are a participant in an employer plan, there is an income range that determines your eligibility to take a deduction for the IRA contribution. These income ranges are listed below for single and married filing jointly filers in 2024:

• For married couples filing jointly where the spouse making the contribution is not covered by a retirement plan but has a spouse who is covered, below is the income range that determines your eligibility to take a deduction for the IRA contribution in 2024.

• Contribution amount cannot exceed earned income.
• There is an income range that determines your eligibility to make a ROTH IRA contribution. The limits for 2024 are as follows:

You must be covered under a qualifying High Deductible Health Plan to contribute to an HSA. To be considered an HSA-qualified insurance plan, the plan must meet IRS requirements, which include limits on annual deductibles and out-of-pocket maximums. 2024 minimum deductibles and maximum out-of-pocket amounts are listed below and are indexed annually for inflation.

HDHP minimum deductible

• Self-only: $1,600
• Family: $3,200

HDHP maximum out-of-pocket amounts

• Self-only: $8,050
• Family: $16,100

To be eligible to make a catch-up contribution to a retirement plan, you must reach the specified age by the end of the calendar year for which you want to contribute.

• E.g., to contribute an additional $1,000 to an IRA for 2023, the account owner must have turned age 50 by 12/31/2023.

Whether you’re a first-time investor or you’ve funded retirement accounts for years, it’s always a good idea to review your contribution amounts annually. If limits have changed as they often do, you could be missing out on the chance to maximize your savings!

Sources: 401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000, Rev. Proc. 2023-23