Contributing to a 401(k) can be a pretty smart way to start getting everything ready for your retirement, but there are some parameters to take into account, the 401(k) contribution limits tell you how much you can contribute in a calendar year, there is also a combined contribution limit for you and your employer, in addition to catch-up contribution limits.
If you’re just getting started with your 401(k), it’s important to understand the 401(k) contribution limits for 2024.Let’s take a closer look at the 2024 401(k) plan contribution limits so you can get the most out of your retirement savings.
401(k) Retirement Plans Contribution Limits for 2024
Year after year, the contribution limits to the 401(k) grow by a small amount, if you recently started a 401(k) plan, the contribution limits of the year 2024 are especially important.
The 2024 employee contribution limit to the 401(k) plan is $23,000, which is an increase of $500 from last year. This contribution limit does not cover catch-up contributions or contributions your employer makes to your 401(k).
The absolute limit of contributions to the 401(k) plan for this year 2024, which includes parallel employer contributions and non-elective contributions, is $69,000, this limit does not include catch-up contributions for employees aged 50 and older.
You can have a conversation with your plan administrator to agree on how much you need to contribute to maximize your 401(k) contributions by 2024.
Escalation From the 401(k) Contribution Limits in 2023
Since the contribution limits to the 401(k) normally increase every year, the contribution limits for the year 2023 are slightly lower, the 401(k) contribution limit for the year 2023 was $22,500, or $500 less than the limit for the year 2024, this is the personal contribution limit, which means that neither catch-up contributions nor contributions made by your employer are included.
In total, the overall 401(k) contribution limit for 2023 is $66,000, including your personal contributions as well as any contributions made by your employer, but catch-up contributions are not included. The catch-up contribution limit for 2023 is $7,500, if you are eligible to make catch-up contributions, your total combined 401(k) contribution limit for 2023 is $73,500.
Catch-up Contribution Limits for 2024
If you are 50 or older at the end of the calendar year, you can make catch-up contributions.
The 401(k) contribution limit for people over 50, or the catch-up contribution limit, is $7,500 in 2024, this means that your total 401(k) contribution limit for 2024 is $30,500, this number only includes personal contributions, employer matches, non-elective contributions are not included.
Catch-up contributions are not something unique to 401(k) plans. You can also make catch-up contributions if you have a government 403(b), SARSEP, or 457(b).
All catch-up contributions must be made through elective deferrals and you have until the end of the calendar year to make your annual catch-up contributions.
