The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments for the year 2024, impacting the benefit and contribution limits applicable to retirement plans. According to the announcement, these adjustments see a modest increase in these limits for 2024, which may have several implications for corporate and law firm employees.
The key change lies in the elective deferrals under 401(k), 403(b), and eligible 457(b) plans, where the limit has been increased to $23,000. This represents an opportunity for higher investments in retirement by employees participating in these plans.
As legal professionals advising clients, it’s important to take note of these changes for planning purposes and to offer up-to-date legal counsel regarding retirement plans and tax obligations. Not only do these adjustments affect the contribution limits towards these plans, but they may also carry tax implications for the employees participating in them.
Given the complexity of these adjustments, the task of apprising employees of these changes and their potential impact on retirement savings, often falls on the shoulders of legal advisors. Understanding these new limits, therefore, could form a central part of corporations’ and law firms’ legal strategy in the coming months.
For more intricate details on how these changes were determined, and how they compare to previous years, refer to the announcement linked above.