How much can you contribute to a 401(k) in 2024?

💡 Key takeaways:

• The IRS limits how much employees and employers can contribute to a 401(k) each year.
• In 2024, the 401(k) contribution limit for participants is increasing to $23,000, up from $22,500 in 2023.
• Participants who are 50+ can save an additional $7,500 in 2024 in catch-up contributions.
• In 2024, the combined contribution limit is increasing to $69,000, up from $66,000 in 2023.

No matter where you are on your path to retirement, a 401(k) can help you plan for your financial future. But the big question is, how much can you save for retirement?

There are a lot of factors that can help you determine how much you should save for retirement, including your income, where you live, and what your personal retirement goals look like. But this post focuses on how much you're actually allowed to save each year.

Below we’ll deep dive on all things contribution limits: what they are, how they’re determined, and how much you and your employer can contribute to different retirement plans this year.

What are contribution limits?

Contribution limits cap how much employees and employers can contribute to a retirement plan in a given year.¹ The IRS re-evaluates these limits annually based on factors like inflation and the cost of living. The limits were established to help create fairness in retirement savings, ensuring that higher income earners don’t benefit more from a 401(k) than those with a more modest salary.

401(k) contribution limits in 2024

Employee contribution limits

Employee contribution limits for 401(k) have increased for 2024. Employees can contribute up to $23,000 in 2024, an increase from $22,500 in 2023.

Employees further along in their careers can save even more money for their future with catch-up contributions. People aged 50 or older are eligible to make additional contributions to their 401(k) plans since they're getting closer to retirement age and may need to "catch up" in their savings. The limit for catch-up contributions in 2024 will stay the same at $7,500, which means eligible employees can contribute up to $30,500 to their retirement savings in 2024.

Employer contribution limits

Employers can support their team members’ retirement goals by offering to make employer contributions.  Employer contributions don't impact your individual annual contribution limit. That's because the IRS has a higher combined limit for employee and employer contributions. In 2024, that combined contribution limit will be $69,000 or 100% of the employee's salary, whichever is lower. The limit is $76,500 if the employee is over age 50 and making catch-up contributions.

Starter 401(k) contribution limits

Starter 401(k) plans are new in 2024, and were created to encourage more employers to offer retirement benefits to their employees. These plans automatically satisfy compliance tests and have fewer employer requirements, but lower contribution limits than a standard 401(k). The contribution limits are $6,000 per employee and $1,000 in catch-up contributions for employees aged 50 and older. Employers are not allowed to contribute.

IRA contribution limits

Traditional IRA contribution limits

The 2024 limit on annual contributions to an IRA will be $7,000, an increase from $6,500 in 2023. The 2024 catch‑up contribution limit for individuals aged 50 and over will stay at $1,000, the same rate from 2023.

Roth IRA contribution limits

Contribution limits are the same for traditional and Roth IRAs. Both have $7,000 contribution limits in 2024 and catch-up contributions of $1,000 for individuals aged 50 and over.

SEP IRA contribution limits

SEP IRA contribution limits for 2024 will be $69,000, up from $66,000 in 2023. The contributions can't be more than 25% of the employee's compensation. With a SEP, which is short for Simplified Employee Pension, contributions are only made by the employer. These flexible IRA plans are tax-deferred, have larger contribution limits, and have fewer administration requirements than other retirement plans.

401(k) contributions FAQ

We know there’s a lot more to consider than annual contribution limits when determining how much to save for retirement. Below we’ve answered a few frequently asked questions about 401(k) plans that might help you choose how to approach your retirement goals this year.

Should I max out my 401(k)?

Maxing out your 401(k) means contributing the maximum amount permitted by the IRS in a given year. If you're able to contribute that amount, that's great! We advocate for trying to save as much as possible, to the extent it makes sense for your own goals and budget. By saving more, you can reap the rewards of a 401(k), like reducing your taxable income and earning compound interest, which can help grow your savings over time. Remember — it’s always a good idea to speak with an investment or tax professional to determine your personal retirement strategy.

Can I contribute to more than one 401(k)?

Yes, you can contribute to more than one 401(k), but be aware that your contribution limits include all your accounts. That means in 2024, you'll only be able to contribute up to $23,000 across all your 401(k) accounts and not $23,000 to each.

What happens if I exceed the 401(k) contribution limit?

If you overcontribute, you may be eligible to receive a refund of your excess contributions, including any gains or losses incurred. That excess contribution will be taxed, too. Also, if your employer made matching contributions to your account, any match you received on your excess deferrals will be forfeited.

What can I do if I over-contribute to my 401(k)?

If you contribute too much to your 401(k) and catch it in time, you can fix the mistake. You'll need a corrective distribution, which means taking the excess money (and any amounts earned thereon) out of the account. The corrective distribution must be made by tax day. Guideline helps savers avoid exceeding their contribution limit by automatically adjusting contribution rates as they near the limit.

2024 retirement account contribution limits

To recap, here's an overview of the 401(k) contribution limits for 2024.  

Disclosures:

This information is general in nature and is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances.  You are advised to consult a qualified financial adviser or tax professional before relying on the information provided.

¹ Starter 401(k) and Standard 401(k) annual limits may be adjusted annually by the IRS to account for cost-of-living adjustments. Learn more.