Navigating changes demands an adaptable approach to financial planning.

As we embark on 2024, the landscape of retirement planning is undergoing a substantial transformation, with revisions to tax brackets, retirement contribution limits, estate and gift tax exemptions, and  Secure 2.0 changes, a pivotal retirement legislation. These changes carry implications that resonate deeply with both prospective retirees and current savers, shaping a new era of retirement preparedness.

No More RMDs with Roth 401(k)s

A momentous shift is unfolding in the realm of retirement savings, marked by the exemption of Roth 401(k)s from mandatory minimum distributions (RMDs), set to commence in 2024. This landmark amendment aligns Roth 401(k)s with the privileges enjoyed by Roth IRAs, liberating investors from the traditional approach of hastening asset transfers post-retirement. This is particularly significant for those holding exceptional Roth 401(k) plans featuring minimal costs and stellar investment options.

Contribution Limits Rise

In tandem with inflation-driven adjustments, contribution limits for various retirement accounts are on the rise in 2024. Noteworthy increases include company retirement plan contributions, such as 401(k), 403(b), or 457, escalating to $23,000 for individuals under 50 and $30,500 for those aged 50 and above. Simultaneously, IRA contribution limits increase to $7,000 for individuals under 50 and $8,000 for those aged 50-plus. These changes in contribution limits extend to health savings accounts, offering potential as stealth retirement vehicles.

Tax Thresholds Are Up

Amidst the alterations, the thresholds for estate and gift taxes witness a notable uptick in 2024, providing married couples an increased federal estate tax shield exceeding $27 million. Moreover, the qualified charitable distribution (QCD) limit escalates to $105,000, fostering charitable contributions while optimizing tax benefits.

Rolling Over 529 Assets

Secure 2.0 introduces avenues for rolling over unused 529 assets to a Roth IRA, enabling beneficiaries to transfer up to $35,000 over time. This provision unlocks a novel strategy for optimizing savings and investments, offering flexibility and potential tax advantages.

Expanding 401(k) Flexibility

A series of provisions stemming from Secure 2.0 offer enhanced flexibility within retirement plans. Employers gain the ability to match retirement plan contributions for employees simultaneously repaying student loans, ushering in innovative strategies for debt repayment and retirement savings alignment. Furthermore, provisions enabling plans to address emergency expenses through designated savings and penalty-free withdrawals underscore the legislation’s intent to bolster financial preparedness.

Embracing the Evolving Terrain

As the curtain rises on 2024, a plethora of transformations in retirement planning demands a nimble and adaptable approach. The evolving legislation and revised limits present not just challenges but opportunities for savvier financial planning, urging investors and retirees to reassess their strategies, leverage new possibilities, and adapt to this dynamic landscape. With Secure 2.0’s progressive initiatives, the door opens to innovative approaches that empower individuals to bolster their retirement prospects while navigating unexpected financial contingencies.



Copyright © 2024 FMeX. All rights reserved. Distributed by Financial Media Exchange.
Ethos Capital Management, Inc. (ECM) is a registered investment adviser. The firm only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Commentary should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author on the date of publication and are subject to change. The information presented does not involve the rendering of personalized investment and should not be viewed as an offer to buy or sell any securities discussed. Articles were prepared by a third party and were distributed by Financial Media Exchange, which is not affiliated with ECM.
All investment strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. Historical performance returns for investment indexes and/or categories, usually do not deduct transaction and/or custodial charges or an advisory fee, which would decrease historical performance results. Returns do not reflect the performance of ECM or any of its advisory clients. There are no assurances that a portfolio will match or exceed any particular benchmark. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses.
The tax information provided is general in should not be construed as legal or tax advice. Information is derived from sources deemed to be reliable. Always consult an attorney or tax professional regarding your specific legal or tax situation. Tax rules and regulations are subject to change at any time.