As 2024 unfolds, significant changes in retirement contribution limits and regulations are taking place, thanks to updates from the Internal Revenue Service (IRS) and the implementation of the SECURE 2.0 Act of 2022. Understanding these updates is crucial for effective retirement planning. This article aims to demystify these changes and provide actionable insights into various retirement savings options.
Enhanced Contribution Limits
The IRS has raised the contribution limits for several retirement plans, providing an opportunity to bolster your retirement savings. For 401(k) plans, the new cap is $23,000, up from $22,500. IRA contributions have also seen a boost, with the annual limit now at $7,000. For those aged 50 and above, the catch-up contribution limit for 401(k), 403(b), and most 457 plans remains at $7,500, allowing a maximum contribution of $30,500. To fully leverage these increased limits, consider adjusting your monthly budget to increase your contributions. If you’re over 50, take advantage of the catch-up contribution to further accelerate your retirement savings. These adjustments can significantly impact your long-term financial security and retirement readiness.
Adjusted Income Ranges and Phase-outs
Income ranges for eligibility and phase-outs for traditional and Roth IRAs have been revised upwards, which may affect your contribution strategy. For single taxpayers who are covered by a workplace retirement plan, the deduction phase-out range for traditional IRAs is now set between $77,000 and $87,000. For married couples filing jointly, this range is between $123,000 and $143,000 if the contributing spouse is covered by a workplace plan. Additionally, income limits for Roth IRAs and the Saver’s Credit have been increased.
To make the most of these changes, it’s important to reassess your current income level and determine if these new ranges allow you to increase your contributions or modify your retirement plan choice. If you’re near the upper limit of the phase-out range, consider strategies like adjusting your contributions to a Roth IRA or exploring other retirement saving options that could provide better tax advantages. Staying within the optimal income range can ensure you maximize your retirement contributions and the associated tax benefits.
SECURE 2.0 Act Highlights
Starting in 2024, the SECURE 2.0 Act introduces several amendments to retirement planning. A notable change is the increase in the mandatory distribution limit for retirement plans transferred to IRAs by former employees. This limit has been raised from $5,000 to $7,000. Additionally, the Act provides a new exception to the usual 10% penalty on early withdrawals from retirement accounts. Now, individuals can withdraw up to $1,000 yearly for unforeseen emergency expenses without incurring this penalty, and they have the option to repay this amount within three years.
The SECURE Act also facilitates the integration of Emergency Savings Accounts (ESAs) into defined contribution plans. These ESAs can now accept contributions made after tax, similar to Roth contributions, offering more flexibility in managing emergency funds within retirement plans. Finally, employers offer two primary types of retirement plans: defined contribution plans, where employees contribute and manage their funds, and defined benefit plans, where employers invest on behalf of employees, and the SECURE 2.0 Act allows employers to make matching contributions based on qualified student loan payments, an innovative approach to employee benefits.
Why These Changes Matter
These updates reflect the ever-evolving retirement landscape, emphasizing the importance of proactive and informed retirement planning. Higher contribution limits provide an opportunity to save more, potentially leading to a more comfortable retirement. The adjustments in income ranges and phase-outs also necessitate a review of your current retirement strategy to maximize benefits. In short, these changes can affect how much you can add to your retirement account(s), making them important considerations heading into 2024.
Exploring Retirement Saving Options
If you are interested in exploring saving options beyond 401(k)s and IRAs, there are multiple retirement saving accounts to choose from. These include SEP IRAs, Solo 401(k)s, SIMPLE IRAs, Profit-Sharing Plans, Defined Benefit Plans, ESOPs, 457(b) Plans, FERS, Cash-Balance Plans, NQDC Plans, and MEPs. Each plan has unique tax implications, contribution limits, pros, and cons. Choosing the right plan depends on individual circumstances, including risk tolerance and retirement goals, so it’s important to discuss your needs with a professional to find the right plan for your unique goals and circumstances.
How to Prepare for 2024
- Review Your Contributions: With the increased limits, assess your current contributions and consider maximizing them to take full advantage of the tax benefits.
- Evaluate Your Plan Choice: Depending on your income level and retirement goals, decide whether a traditional IRA, Roth IRA, or another retirement plan suits you best.
- Understand Tax Implications: Each retirement plan has distinct tax advantages and drawbacks. Understanding these is key to optimizing your savings.
- Plan for Emergencies: The new provisions for emergency withdrawals and ESAs offer a safety net. Consider how these can be incorporated into your retirement strategy.
- Consult a Professional: Given the complexity of retirement planning and the recent changes, seeking advice from a financial advisor is advisable.
Conclusion
The 2024 updates to IRA, 401K, and Roth accounts represent a notable shift in retirement planning. By understanding these changes and exploring various saving options, you can make informed decisions that align with your retirement goals. Whether it’s adjusting your contributions, selecting the right plan, or leveraging new provisions like ESAs, a proactive approach will be instrumental in securing a financially stable retirement.
For more information on IRAs, 401ks, and Roth’s, read “Wealth on Purpose” by Bryan Ballentine.
Have a great weekend!
Sources: Located at the bottom of the article
Golf Tip of the Week
10 things I learned From Tour Players In 2023
In a year marked by division in the golf world, one longer-standing (and admittedly lower-stakes) divide I’ve never understood is that between range rats and golfers who hate the driving range. How can you hate the driving range? For me, it’s always been a place of refuge. A place to go and think, figure things out, reboot and sometimes even a place to panic in peace.
It’s canvassing the driving range of pro events where I get to observe the best at the game, and maybe even find something to tinker with the next time I’m back on some fresh turf, a new bucket of balls and in the mood to figure it out.
1. Find a bread-and-butter drill
Amateur golfers will often flail from one thing to another; they’ll try this drill one day, then that training aid the next. There’s never a shortage of professional golfers doing strange and interesting things on the driving range, but usually it’s the same strange and interesting thing.
Players will often start their practice session with a go-to drill, which they use to combat a specific problem in their swing. Maybe it’s chipping balls one-handed like John Daly, or swinging around a yoga block like Tommy Fleetwood, or using a putting mat training aid like countless players do. Something, basically, that can serve as a sync-up before going on their way.
It’s something you should think about adopting as well. Like drinking your coffee in the morning before going to work. That’s what progress looks like in golf: Not big revolutionary breakthroughs, but small, repeated, consistent efforts.
2. Beware the on-course speed drop off
Your topline speed—meaning, the fastest you’re possibly able to swing a club while hitting a golf ball—takes a while to get to. Upwards of 100 balls trying to swing as fast as you can and not caring about where the ball goes. And there’s value in doing speed-training sessions like that. It builds strength and muscle coordination, among other things. But it’s not going to solve everything.
“It doesn’t mean anything if you can’t transfer it on the golf course,” Padraig Harrington says. “If it doesn’t transfer over, it’s meaningless.”
The frustrating fact of the matter is that golf swings change once they land on the course. They get shorter, and more handsy. You start thinking about where not to hit your drive, and you’re not as loose as when you’re rifling ball after ball.
Transferring those speeds to the course seems to be an increasing priority on tour, and something the rest of us should keep in mind, too. One study found that 80 percent of amateur golfers make a smaller backswing turn once they get on the golf course, and their clubhead speeds drop accordingly.
So if you’re frustrated at being unable to replicate your range speeds on the course, it’s probably because you’re slowing down without you even realizing.
3. Bulk up your upper body
As players prioritizing speed is fully baking itself into the game, I can’t help but wonder if we’re entering the meatball era of professional golf, where practically every golfer is built like a baseball player.
This isn’t exactly new, mind you. Jack Nicklaus was a tremendous athlete in his day. Tiger Woods and David Duval hit the weights hard and bulked up in the early 2000s, as did Rory McIlroy when he arrived on tour, then Brooks Koepka after that, and then, notably, Bryson DeChambeau.
But even the more recent players were each greeted with a hearty dose of skepticism about the true benefits of gaining muscle-mass through strength training. That seems to have all but evaporated these days.
Throwing heavy weight around and getting really strong is simply really good for golfers. And it’s interesting how Woods has once again landed on that as a solution in his own game: He’s bulked up his upper body even more over the past year, which means his speed has not dimished despite his various injuries causing changes to his swing.
“It’s not that something like bench-pressing is good for golfers, it’s that having a strong upper body is good for golfers,” says tour trainer Mike Carroll. “Getting good and strong is just really good for golfers, and it helps us stay healthy as we get older.”
4. One-dimensional drives, multidimensional irons
Granted, most golfers are just happy to make contact consistently and don’t think much beyond that. But believe it or not, the way tour players approach their ball-striking can be a helpful mindset for the rest of us.
There are exceptions, but most players seem to settle on a two-pronged strategy:
Off the tee they embrace a safe, fairly curvy, left-to-right shot shape off the tee. Something they can swing really hard at and know how it’s going to move but not move too much.
Into greens, however, you’ll find most mixing around shot shapes. High and low, left and right.
“In pro golf, you have to draw it and fade it into slopes to access different pins,” Andy Ogletree explains. “You need to go super low to win these events, which means you need to have some tap-in birdies throughout the week. Shaping the ball to different pins and working it up against the winds … it’s the artistic side of the game I’ve gotten really obsessed with.”
No, average golfers are not going to rope draws into side slopes and release the ball down towards the pin. But the general strategy is one the rest of us can, and should, adopt:
- There are worse strategies than swinging hard, and embracing a one-dimensional shot with a bit of curve (like a big fade) off the tee. Remember that you don’t need to be perfect off the tee; you just need to be in play.
- Try to embrace some level of creativity into greens. That doesn’t mean getting too fancy, but that may mean taking two extra clubs and swinging smoothly. Or putting the ball slightly back in your stance and trying to roll something up to the green.
5. Tour pros have fast backswings
A few months ago I visited golf biomechanist Dr. Young-Hoo Kwon, who is a bit of a tour player-whisperer for players looking for extra speed. Dr. Kwon has been one of those on the forefront of golf biomechanics for years, but one of his key principles is making a fast backswing.
It goes against conventional wisdom, but it makes sense: Trying to rip the club away on the takeaway makes it impossible to get lazy. It almost automatically forces you to use your arms, legs and core. Your body starts organizing itself in a far more efficient way. As Rose Zhang put it, there’s less room for slack in your swing.
And despite the old “low and slow” mantra that has been propagated for years, the more you look for fast backswings on tour, the more you realize that almost every player has one.
6. Beware the iron shot comfort zone
One of the turnarounds in Viktor Hovland’s game this season was not leaving himself short-sided as much. It’s a common mistake for every level of golfer, and was a particular issue for Hovland given his inconsistent short game. But what’s interesting is that the short-sided mistake, for pros and the rest of us, doesn’t quite come where we would expect.
Let’s say you hit a left-to-right fade on most shots. When the pin is on the left side of the green, that is not a shot that generally suits your eye, so you’re probably looking to play it safe and set for anything on the putting green. Instead, the trouble comes when you like the look of the shot at hand.
Let’s take the same fader’s approach into the green, but this time the pin is over on the right side of the green. Suddenly, you can see your ball sliding close to it. That’s when golfers tend to get too comfortable and leave themselves short-sided because of it. Even pros.
You may like the shot in front of you, but it shouldn’t distract you from the ultimate goal: avoid the short-side miss.
7. Spin Loft
Another of Hovland’s breakthroughs this season came around the green, thanks to an embracing of a concept called spin loft. Spin loft, basically, is a combination of how much you hit down on the golf ball, and how much loft the golf club effectively has at impact.
Hovland’s coach, Golf Digest Top 50 Teacher Joe Mayo, has been an evangelist of the metric for a number of years, and its recent popularization provides some useful benefits for the rest of our games:
- If your full-swing shots balloon high and weakly into the air, your spin loft is likely too severe. In short, you need to try to hit more up on the ball.
- If your chips land on the green and run through without any grab, your spin loft is probably too low. You may need to hit more down on the ball.
8. Slope is a science
The idea that putting is an art that can never be perfected is one of those magical, mystical things that I guess is sort of true. But increasingly that idea has been running into a rather inconvenient fact that so much of putting is a literal science.
Green reading is in some ways the best example. Calculating how something will move along a slope is a literal, somewhat simple, mathematical equation to solve. You just need the weight of the object, the degree of the slope and the smoothness of the surface.
Yes, in practical terms, there are judgement calls involved. But more and more golfers are leaning into the quantifiable side of the game, and taking the guesswork out of it. You should too.
9. The battle against inflammation
One topic I kept hearing coaches and players talk about, beyond swing mechanics, in 2023 is how they’ve become acutely conscious of things they can, and should, be doing to avoid inflammation in their body.
Probably the most common two are taking lots of ice baths, and interestingly, taking a dose of tart cherry. The two became mainstays of Jon Rahm’s routine throughout the season, and underlines the reality of the modern golfer and the wear-and-tear of a season that never ends takes its toll.
10. Fail 40 percent of the time
At the Waste Management Phoenix Open, I was talking with Josh Gregory, who coaches a ton of players across lots of tours. Gregory is a teacher who focuses more on performance than mechanics, aiming to help players think smarter and practice more effectively. During our chat he said something interesting that has stuck with me. When he sets up a drill, or game, for tour players, it should be hard enough that they are failing at it about 40 percent of the time. Gregory says it nees to be hard enough so you’re focusing intensely on doing it right, but not so hard that you’re failing constantly and getting beat down because of it.
These are the kind of margins tour players operate within. Are you?
Tip adapted from golfdigest.comi
Recipe of the Week
Grand Champagne Cocktail
4 Drinks
Ingredients
- 4 shots orange-flavored liqueur (recommended: Grand Marnier)
- 4 teaspoons honey
- 4 fresh strawberries, tops trimmed
- 1 bottle Champagne, well chilled
Instructions
- Add the orange-flavored liqueur, honey and strawberries to a food processor and process until smooth. Fill the chilled glasses halfway with the strawberry mixture and then fill the rest of the glass with Champagne.
Recipe adapted from Foodnetwork.comii
Health Tip of the Week
Losing Just Two Hours Of Sleep Takes An Emotional Toll
Staying up late, sleeping too little, or waking up often can significantly impact a person’s emotional health, according to a new analysis that spans decades of sleep research.
Healthy emotional functioning is essential to our everyday lives, researchers explained. They noted that emotions impact our physical well-being, motivation, decision-making, social interactions, learning, and memory.
The latest findings, which stem from an analysis of sleep research from the past 50 years, appeared this week in the American Psychological Association’s journal, Psychological Bulletin. All of the 154 studies that the researchers used involved studying participants overnight while evaluating different ways that people can lose sleep, such as keeping people awake for extended periods of time, waking them up earlier than usual, or periodically awakening them through the night.
Researchers looked for how those changes in sleep affected people’s emotions, as well as the impact on mood, such as changes in anxiety or depression symptoms.
By combining data for the more than 5,700 people in all the studies, researchers found that reductions in sleep:
- Reduced positive emotions, like joy.
- Increased anxiety symptoms, such as rapid heart rate or worrying.
- Diminished the ability to express emotions, such as recounting the facts around a loved one’s death but not being able to describe how it makes you feel.
“This occurred even after short periods of sleep loss, like staying up an hour or two later than usual or after losing just a few hours of sleep,” said researcher Cara Palmer, PhD, an assistant professor at Montana State University, in a statement. “We also found that sleep loss increased anxiety symptoms and blunted arousal in response to emotional stimuli.”
For most impacts that the researchers looked at, the more sleep a person lost, the greater the emotional toll. Participants in the studies were generally healthy and ranged in age from 7 years old to 79 years old.
“Emotions govern virtually every aspect of our daily lives, and depriving ourselves of sleep seems to be a sure way to elect a terrible governor,” said researcher and University of Houston professor of psychology Candice Alfano, PhD, who is also director of the Sleep and Anxiety Center of Houston, in a statement. “Our findings confirm that even when sleep is only mildly deficient, there are measurable negative changes in how we react to everyday events.”
Tip adapted from WebMD.comiii
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Sources:
401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000
Types of Retirement Plans and Which to Consider
SECURE 2.0: Retirement Plan Changes for 2024
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i https://www.golfdigest.com/story/things-i-learned-from-tour-players-2023
ii https://www.foodnetwork.com/recipes/bobby-flay/grand-champagne-cocktail-recipe-2014497
iii https://www.webmd.com/sleep-disorders/news/20231222/losing-just-two-hours-of-sleep-takes-an-emotional-toll
