Every year in October, the IRS reviews the 401k contribution limits based on inflation data from the customer price index (CPI) and decides whether to increase the limits for next year.
With fewer and fewer companies offering pensions to their workers, the IRS encourages people to save for retirement in a 401k by deferring taxes on any contributions made to 401k’s. This allows you to have more money available to grow tax-free so you aren’t depending on just social security in retirement.
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What are the 401k Contribution Limits in 2024?
The IRS has announced the maximum 401k contribution limit for 2024 will increase to $23,000 for the employee contribution portion. This is an increase of $500 from 2023’s maximum employee deferral contribution.
The total contribution limit for 2024 has also been increased. The total contribution limit, which includes the employee portion plus any employer matches, profit-sharing contributions, and bonuses has increased to $69,000. This is an increase of $3,000 over 2023.
Employees who are age 50 or older can contribute an additional $7,500 as a catch-up contribution for a total employee contribution of $30,500.
History of 401k Contribution Limits
The below table lists the maximum 401k plan contribution limits over the years.
| Year | Employee Contribution Limit | Total Contribution Limit | Catch-up Contribution |
| 2024 | $23,000 | $69,000 | $7,500 |
| 2023 | $22,500 | $66,000 | $6,500 |
| 2022 | $20,500 | $61,000 | $6,500 |
| 2021 | $19,500 | $58,000 | $6,500 |
| 2020 | $19,500 | $57,000 | $6,500 |
| 2019 | $19,000 | $56,000 | $6,000 |
| 2018 | $18,500 | $55,000 | $6,000 |
| 2017 | $18,000 | $54,000 | $6,000 |
| 2016 | $18,000 | $53,000 | $6,000 |
| 2015 | $18,000 | $53,000 | $6,000 |
| 2014 | $17,500 | $52,000 | $5,500 |
| 2013 | $17,500 | $51,000 | $5,500 |
| 2012 | $17,000 | $50,000 | $5,500 |
| 2011 | $16,500 | $49,000 | $5,500 |
| 2010 | $16,500 | $49,000 | $5,500 |
| 2009 | $16,500 | $49,000 | $5,500 |
| 2008 | $15,500 | $46,000 | $5,000 |
| 2007 | $15,500 | $45,000 | $5,000 |
| 2006 | $15,000 | $44,000 | $5,000 |
| 2005 | $14,000 | $42,000 | $4,000 |
| 2004 | $13,000 | $41,000 | $3,000 |
| 2003 | $12,000 | $40,000 | $2,000 |
| 2002 | $11,000 | $40,000 | $1,000 |
| 2001 | $10,500 | $35,000 | – |
As you can see, the employee contribution portion tends to increase in $500 increments with some years where there are zero increases from the previous year.
The “catch-up contribution” column applies only to people who are age 50 and older. The IRS allows older 401k participants to make additional contributions beyond the standard limits to encourage workers nearing retirement to increase their savings.
The total contribution maximum limit tends to increase in $1,000 increments. In recent years, the max contribution has increased in larger amounts due to inflation.
So far there hasn’t been a year where the contribution limits have decreased from the year before.
Roth 401k Contribution Limits
Roth 401k accounts have the same contribution limits as traditional 401k accounts. You can contribute up to $23,000 to a Roth 401k plan, and up to $66,000 in total if you are under 50 years of age.
It is possible to have multiple 401k accounts. You can have both a Roth 401k and a traditional 401k and contribute to both plans at the same time as long as your contributions to both don’t exceed the 401k limits.
For 2024, you can allocate your employee salary deferral and employer’s contribution however you choose between your Roth 401k and 401k retirement accounts as long as you don’t exceed $23,000 for the employee deferral and $46,000 for the employer’s portion.
Other tax-advantaged retirement plans such as the 403b (for nonprofit and certain public school employees), 457b (for state and local government employees), and the Thrift Savings Plan or TSP (for federal employees and members of the armed forces) have the same max contribution limits as the 401k.
How to Maximize Your 401k Contributions
If you can max out your 401k contributions every year, you will be well on your way to a solid retirement.
To contribute to your 401k, you must have earned income. If you earned $15,000 for the year, the most you can contribute to your 401k or similar qualified retirement account is $15,000 for the employee salary deferral portion even though the limit is $23,000.
There are two ways you can contribute to your 401k account to maximize your contributions and tax savings for the year.
By Contributing A Fixed Amount
To calculate how much from each paycheck to put into your 401k if you are going to contribute a fixed dollar amount, take the max allowable amount you can contribute for the year and divide it by the total number of pay periods.
If you are paid monthly, divide the figure by 12. If you are paid biweekly, divide it by 26.
For 2024, someone who is under 50 years of age can contribute $1,916.66 monthly or $884.61 per pay period if you are paid twice a month.
By Contributing A Percentage of Your Paycheck
If your company does not allow you to contribute a flat dollar amount to your 401k, to max out your 401k for the year you will need to take the dollar amount you want to contribute, up to the yearly limit and divide it by your salary to calculate the percentage of pay to contribute.
For example, if you want to contribute the full $23,000 for the year and you earn $100,000 a year, take $23,000 and divide it by $100,000. You will be able to contribute 23% of your salary or from each paycheck to max out your 401k for the year.
After you’ve decided on the amount of funds you want to put into your 401k, head over to your HR department or your 401k plan administrator to update your contribution amount or percentage.
What to Do If You Cannot Max Out Your 401k
If you cannot afford to contribute up to the maximum amount, then you should at least contribute enough to get your employer match. Not contributing to a 401k when your company is matching your contributions is like saying no to free money.
More: Follow These Order of Contributions When Saving For Retirement
Employer matching programs vary depending on the company. A typical 401k employer match percentage might be between 3% and 6% of your salary. Some companies may match one dollar for every dollar you put in. Others may only match 50 cents for every dollar.
An employer with a dollar-for-dollar matching contribution on 6% of a $100,000 salary means up to an extra $6,000 in free money to your retirement account.
If You Want to Save More for Retirement
Have you contributed up to the 401k limit and want to save more for retirement? The best way to do that is to have multiple retirement account types.
If you do not earn more than the income limits, you can open up an after-tax Roth IRA and your all earnings will be tax-free in retirement.
You may also be able to open a traditional IRA. Depending on your modified AGI, the contributions may be nondeductible but your savings will still grow tax-deferred like a 401k.
Another option is to sign up for a high-deductible health insurance plan that qualifies for a health savings account. Not only is the money you contribute into the account tax-deductible, a HSA is triple-tax advantaged. The earnings in the account will grow tax-free and any funds withdrawn for qualified health expenses are also free from taxes.
Closing $ense
Not only do you get to avoid paying taxes on the money you put into a 401k, but many employers are also giving employees free money by matching their contributions.
The best way to have a comfortable retirement in the future is to contribute early and often so compound interest on your investments does all the hard lifting for you.
Self-employed individuals and freelancers are not excluded from accessing tax-advantaged retirement plans either. With a Solo 401k or Self-Employed 401k, you have the same 401k contribution limits as salaried workers with the option of also making a contribution up to 20% of earned income on top of the employee deferral contribution since you are both the employee and the employer.
If you haven’t considered it yet, starting a side hustle to earn extra money on the side and starting a Solo 401k is one way to stash even more money away for retirement.
Do you plan to max out your 401k in 2024?
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