RETIREMENT
Top off retirement plans. If you claim the standard deduction—and these days, the majority of taxpayers do—you have a limited number of tax breaks available to you, so don’t overlook one of the most effective ways to lower your 2024 tax bill. Contributing to a traditional 401(k) or other employer-provided retirement plan will reduce your taxable income and enhance your retirement security. You have until the end of the year to contribute up to $23,000 to your 401(k) for 2024 if you’re younger than 50. You can put in an extra $7,500 if you’re 50 or older by the end of 2024, for a total of $30,500.
You have until the April 2025 deadline to file your tax return to contribute as much as $7,000, or $8,000 if you’re 50 or older, to a traditional or Roth IRA for 2024. Contributions to a traditional IRA are deductible if you’re not covered by an employer-provided plan or your earnings fall below specific thresholds. Contributions to a Roth IRA aren’t deductible, but if you’re 59½ or older and have owned a Roth for at least five years, withdrawals are tax-free.
If you work for yourself and have no employees (other than your spouse), you can save a significant amount of money in a solo 401(k). These plans allow you to make an employee contribution up to the standard 401(k) maximum as well as an employer contribution of up to 20% of your net self-employment income, for a combined total of no more than $69,000, or $76,500 if you’re 50 or older, for 2024.
You must establish the solo 401(k) and indicate that you plan to make an employee deferral by the end of 2024. But if you’re a sole proprietor, you have until the April 2025 tax-filing deadline to make both employee and employer contributions to your account.
Esta historia es de la edición December 2024 de Kiplinger's Personal Finance.
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Esta historia es de la edición December 2024 de Kiplinger's Personal Finance.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
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