Daily Money - 401(k)s Just Got a Major Leg up

Workers with employer-sponsored retirement accounts will be able to squirrel away more money next year thanks to an inflation adjustment.

The IRS gave 401(k) contribution limits a boost for 2024, allowing workers to put up to $23,000 in their tax-advantaged accounts, up from this year’s $22,500 max.

That extra $500 per year might not seem all that significant, but for workers in their 20s and 30s with decades of compound interest to look forward to, it’s a pretty sweet deal. (Of course, the ball is in their court to put it to good use.) The extra money can be a boon to all workers come tax season — since traditional 401(k) contributions are made pre-tax, they reduce your taxable income for the year.

The IRS looks at 401(k) contribution limits in tandem with cost of living adjustments. And since the consumer price index clocked inflation at 3.7% for the 12 months ending in September, the agency increased contribution limits, too. There was an even bigger boost for 2023, when the IRS lifted the limit from $20,500 to the current $22,500 amid surging inflation.

Other changes for 2024 include:

• The contribution limits for 403(b)s, the Thrift Savings Plan for federal workers and most 457 plans will also all go up to $23,000.
• Employees 50 years old and up can make “catch-up” contributions up to $7,500 in addition to the $23,000 maximum.
• The maximum for IRAs and Roth IRAs will increase from $6,500 to $7,000.
• Income caps for Roth IRA contributions in 2024 will be $161,000 for single taxpayers, up from $153,000 this year.

You can read more details about the new limits in Money reporter Peter Grieve’s story.

— Mary Ellen Cagnassola, Money reporter

Women may have more career options than they once did, but more than half (57%) say they feel like they don’t make enough money to save for retirement, according to a survey from Transamerica Institute.

What’s more, only 19% said they’re “very” confident they’ll be able to retire comfortably. The research comes from the Transamerica Center for Retirement Studies’ outlook report on women’s retirement, which evaluates the personal finances and retirement prep of adult women who work in the for-profit sector.

• Republican presidential candidates pledged to cut Social Security benefits and raise the retirement age as a solution to the program’s looming insolvency crisis.
• Medicare Part B premiums are rising by $9.80 per month in 2024, which will reduce the size of most Social Security beneficiaries’ payments.
• Gen Zers are prioritizing living in the moment over retirement planning and saving, a new Intuit survey found.

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