Retirement & Savings

Several key changes have been made to retirement savings rules that could impact your planning. Here’s a summary of what’s new:

  1. 401(k) Contributions: The annual limit has increased to $22,500, with an additional $7,500 catch-up contribution allowed for those age 50 and over.
  2. IRA Contributions: You can now contribute up to $6,500 if you’re under 50, or $7,500 if you’re 50 or older.
  3. Roth IRA Income Limits Expanded:
  • Single filers: Phase-out range is now $138,000 to $153,000
  • Married filing jointly: Phase-out range is $218,000 to $228,000
  1. Required Minimum Distributions (RMDs):
  • The starting age for RMDs has increased from 72 to 73.
  • The penalty for missing your first RMD has been reduced to 25%, and it may be further reduced to 10% if corrected in a timely manner.
  • To qualify for the reduced penalty, the missed RMD must be corrected within two years of the year it was due. You’ll also need to file Form 5329 and include a brief explanation of the reasonable cause.