2024 Contribution Limit Updates

It’s a new year, and the IRS has shared the new limits for various retirement accounts. 

2024 IRA Contribution Limits:

The contribution limits for IRAs increased from $6,500 to $7,000 for 2025. That’s an additional $500 you can contribute, and it applies to both Roth and Traditional IRAs. This limit is the total amount you can contribute to your IRA accounts.

Another interesting change is that there is a tax-free rollover from 529 plans (investment accounts for education) to Roth IRAs starting in 2024.

• In the past withdrawing money from a 529 for non-education purposes has a 10% penalty with it.

• There is a $35K lifetime cap on these transfers.

• These rollovers are subject to Roth IRA contribution limits.

• They can only be made to the beneficiary’s Roth IRA (rolled into the child's Roth, not the parent’s).

• And you cannot roll over contributions made in the last 5 years to the 529

2024 401(k) & 403(b) Contribution Limits:

These plans are employee-sponsored, either through a corporation or non-profit. The limit increased to $23,000 in 2024.

2024 HSA Contribution Limits:

Health Savings Accounts, or HSAs, are accounts offered by some health insurance plans to help cover medical costs. The unique thing about these accounts is that they are pre-tax dollars, can be used to cover medical bills and/or invest the money, and it is tax-free at retirement. They are called triple tax-advantaged accounts.

The individual contribution limit increased to $4,150 in 2024, and families can now contribute up to $8,300.

Why does this matter?

Well, because the more time your money is in the market is better than timing the market when it comes to investing.

Let’s do some math:

Say you maxed out your 401(k), HSA, and Roth IRA for 2024 you would have invested $34,150.

Assuming an annual return of 8% in 30 years, that would compound to over $373K.

Just from this one year of investing alone. 

If you aren’t sure what this means for you or how to invest with these types of accounts, we’ve got you covered. Learn more about the Wealth Circle, our online course and community that’s improving women’s financial lives.