PFA Updates

Dec 29, 2023

Hello, friends.

Inflation has enhanced some of the key values we track as financial planners. It has affected income taxes, retirement saving maximums, income limits, and more in a positive manner.

Below is a summary of thresholds we think are important to know for 2024. This is by no means a comprehensive list, but rather a summary [1] of changes that impact many of our clients and directly relate to the financial strategies we strive to maximize.

Regarding Retirement Savings

• IRA and Roth IRA maximum contributions increase to $7,000. For age 50+, the "catch-up" is $1,000 more for a total of $8,000.
• 401-k/403-b maximum payroll deferrals increase to $23,000. For age 50+, the "catch-up" is $7,500 for a total of $30,500.
• Health Savings Accounts (HSA) - single increases to $4,150 and family is $8,300. Age 55+, yes 55, not 50, add an additional $1,000.
• Roth IRA MAGI earned income limits before contribution phaseout starts - single filer $146,000, filing joint $230,000.
• If your income is above these thresholds, let’s talk about a “Back Door” Roth IRA.
• If you are age 70.5 or older, and you have a pre-tax IRA, Qualified Charitable Distributions (QCD) are still available.
• If you turn age 73 in 2024, Required Minimum Distributions (RMD) start for pre-tax savings accounts like IRA’s, 401- k’s, 403-b’s, etc.

Income Tax Brackets and Income Limits of Interest

• The standard deduction increases - single filer $14,600 and joint filer $29,200. Age 65+ add another $1,950 if single or $3,100 joint filer.
• Federal tax brackets for single filer: top of the 12% bracket $61,750, 22% $115,125, 24% $206,550.
• Federal tax brackets for joint filers: top of the 12% bracket $123,500, 22% $230,250, 24% $413,100.
• The Capital Gains tax rate remains at 0% if you are within the 12% bracket.
• If you are on Medicare, IRMAA premium increases begin above MAGI of single filer $103,000, joint filer $206,000.

If you are interested in starting your Social Security before Full Retirement Age (FRA), the maximum earned income limit is $22,320 before phaseout begins. For most people these days, FRA is age 67.

As an example, if you wanted to start Social Security at age 62, the maximum you could earn in a job is $22,320 before you must give some of the Social Security benefit back. In the calendar year you reach FRA, the maximum earned income limit is $59,520. Once you hit FRA, there are no earned income limits.

If You are Feeling Generous

• The annual gift limit is increasing to $18,000 per person. Married couples can double the amount to $36,000 per person.

Let us know if you have any questions regarding these key numbers or how they apply to your financial strategies. Happy New Year!

Sincerely,

The Team at Presper Financial Architects

[1] IRS and Social Security Administration Updates 2024, and as quoted by carrolladvisorygroup.com Cheat Sheet online publication.