As we move into the new year, we want to provide you with the latest 2024 Annual Limits Guide from the College for Financial Planning®. This guide contains many of the important financial and tax planning numbers that may apply to you in the year ahead. Staying up-to-date and proactive with these figures can help you maximize your financial opportunities and make informed decisions throughout the year.
We also want to highlight two of the many provisions brought about by the SECURE Act 2.0, which became effective in 2024:
529 Education Savings to Roth Rollover: Many individuals contribute to 529 plan accounts to save for future education expenses, but later find out that not all the funds were needed. While several options exist for utilizing excess funds, beginning in 2024, owners of 529 plan accounts who meet certain criteria may roll over a portion of the account into a Roth IRA. This option is only available to a 529 account that has been open for at least 15 years, and the amount transferred cannot include amounts (plus related earnings) contributed during the previous five years. Additionally, the amount transferred during any given year is limited to the maximum annual Roth IRA contribution amount and all transfers are limited to a lifetime maximum of $35,000. Despite these limitations, many 529 plan owners may find this a useful planning strategy.
Increase in Qualified Charitable Distribution from IRAs: IRA owners who are over age 70 ½ and charitably inclined may be pleased to know that the maximum amount allowed as a Qualified Charitable Distribution (QCD) from an IRA will be indexed for inflation starting in 2024. While historically limited to $100,000, qualified individuals can now make QCDs up to $105,000. When utilized properly, this strategy can be a tax-efficient method of supporting favored charities, avoiding income tax on the withdrawal and meeting some, or all, of the minimum required distribution (if applicable).
If you have any questions on how to optimize your financial planning this year, please reach out to your portfolio manager to explore what opportunities exist in your personal wealth planning landscape.
Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational and informational purposes only and not as a substitute for qualified counsel. We believe the information provided is from reliable sources but should not be assumed accurate or complete. You should consult qualified professionals to understand how this information may, or may not, apply specifically to you.