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2024 IRS Limits: IRAs, Gifts, Estate, & More! Thumbnail

2024 IRS Limits: IRAs, Gifts, Estate, & More!

Daniel Weiss CFP® EA

Since I was age 13, nearly every year, our family has travelled to a small Caribbean Island called Anguilla to spend time together, relax in the sun, reflect, and set goals for the coming year. As of this writing, I am ~35,000 feet in the air on a flight from Paris to the Caribbean for this purpose.

In respect to setting goals, there are many areas to consider: health, family, social relationships, work, education, finances, and hobbies, among others. For financial health, it can be beneficial to consider: What would you like your finances to look like 12-months from now? How would that vision be different from today? How do you achieve that goal? Is there a savings target you want to accomplish? Do you want a higher salary? Are there estate documents you must complete?

As wealth planners, our objective is to help clients maximize their wealth and make course corrections to achieve goals as the financial landscape changes. One way the landscape changes is that each year, due to inflation, the IRS announces updated limits that can be contributed to retirement plans, gifted to others without tax implications, and bequeathed without paying federal estate tax, among others.

Taking advantage of these raised limits enables more tax-efficient savings, gifting, and estate planning, further increasing the probability of achieving your goals.

2024 changes are as follows:

  • IRA/Roth IRA Contribution (under age 50): $6,500 (2023) to $7,000 (2024)
  • Catch-Up Contribution (age 50 and above): Still $1,000 
  • Total Contribution (age 50 and above): $7,500 (2023) to $8,000 (2024)
  • 401(k)/403(b)/457 Contribution (under age 50): $22,500 to $23,000
  • Catch-up Contribution (age 50 and above): Still $7,500
  • Total Contribution (age 50 and above): $30,000 to $30,500
  • Annual Gift Tax Exclusion: $17,000 to $18,000
    • Amount available to gift without tax implications.
  • 529 Superfund Contribution: $85,000 to $90,000
    • 5-years of 529 Plan contributions up-front in lump sum.
  • Foreign Earned Income Exclusion: $120,000 to $126,500
    • Amount of foreign earned income excludable for income tax purposes.
  • Base Amount for Foreign Housing Exclusion: $19,200 to $20,240
    • Threshold wherein excess foreign housing expenses qualify for the foreign housing exclusion.
  • Gift to Non-US Citizen Spouse: $175,000 to $185,000
    • Amount US citizen can gift to non-US citizen spouse without tax implications.
  • Federal Estate Tax Exemption: $12,920,000 to $13,610,000
    • Amount that can be bequeathed without having to pay federal estate tax.

What Hasn't Changed?

  • Covered Expatriate Net Worth Test: Still $2,000,000
    • Net worth threshold wherein an individual is considered a covered expatriate.
  • Gift or Bequest from Non-US Person; Form 3520 Reporting: Still $100,000
    • Threshold wherein receipt of excess funds requires tax reporting. 
  • FBAR Reporting: Still $10,000 
    • Aggregate amount wherein foreign bank account reporting is required. 
  • Statement of Specified Foreign Financial Assets; Form 8938 Reporting for US Persons Abroad: 
    • Single - Still $200,000 (last day of year) or $300,000 (anytime during year)
    • MFJ - Still $400,000 (last day of year) or $600,000 (anytime during year)
  • Estate Tax Exemption for Non-US Person: Still $60,000 
    • Low estate tax liability threshold for non-US persons with US situs assets.

While this is not an exhaustive list of the IRS updated limits, it should provide guidance on most of the relevant areas, particularly for US expats. As the financial environment changes, it is essential to stay up to date to make the best use of your financial resources. 

Moreover, being forward thinking and planning for changes, like the potential 2026 Tax Cuts & Jobs Act sunsetting enables you to meet challenges with confidence and accomplish goals. Note: we will have a joint event with Withers KhattarWong LLP at the American Club on January 24th to discuss preparing for the 2026 US tax changes and more (RSVP here).

As the year comes to an end, wherever you are in the world, whether it be Singapore, Thailand, Spain, the US, or a small Caribbean Island, I would encourage you to take some time to consider your financial goals for the next 12 months and plan how you will arrive there.

For more information on how to maximize your cross-border wealth over the next year and long-term, please reach out to one of our wealth planners. Here’s to financial success in 2024! 

 

This material is intended for educational and informational purposes only. It is not intended to provide specific advice or recommendations for any individual. Additionally, you should consult with your Financial Advisor, Tax Advisor, or Attorney on your specific situation. The views expressed in the material are that of the author and do not necessarily reflect those of any market, regulatory body, State or Federal Agency, or Association. All efforts have been made to report or share true and accurate information. However, the information may become materially outdated or otherwise rendered incorrect due to subsequent new research or other changes, without notice. The author nor the firm are able to always verify the content from third-party sources. For additional information about the firm, please visit the MAS Website at https://www.mas.gov.sg/ and the SEC Website at www.adviserinfo.sec.gov. For a copy of the firm's ADV Part 2 Brochure, please contact us at info@avriowealth.com.