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Retirement Contribution Limits for 2024

Planning for retirement is crucial, and understanding the contribution limits for various retirement accounts can help you maximize your savings. In 2024, there are specific limits for 401(k) and IRA contributions that you should be aware of. Let’s break down these limits and how they can impact your retirement planning.

401(k) Contribution Limits for 2024

For 2024, you can contribute up to $23,000 to your 401(k) plan. If you are 50 or older, you can make an additional catch-up contribution of $7,500, bringing your total contribution limit to $30,500.

401(k) Contribution Limits With Matching Funds

Employer matching funds do not count towards your basic 401(k) contribution limit. However, the IRS sets a total contribution limit, including matching funds:

• Total contributions for those under 50: $69,000
• Total contributions for those 50 and older: $76,500

IRA Contribution Limits for 2024

In 2024, you can contribute up to $7,000 to a traditional or Roth IRA. If you are 50 or older, you can add an extra $1,000, making the total contribution limit $8,000.

SIMPLE IRA and SEP-IRA Contribution Limits

SIMPLE IRAs have a contribution limit of $16,000, with a $3,500 catch-up contribution for those 50 and older. SEP-IRA contributions are limited to $69,000 or 25% of income, whichever is less, with an additional $7,500 catch-up contribution for those 50 and older.

Roth IRA Income Limits for 2024

To contribute to a Roth IRA, your income must fall within certain limits:

• Married, filing jointly: Full contribution if income is less than $230,000; partial contribution if income is between $230,000 and $239,999; no contribution if income is $240,000 or more.
• Single, head of household, or married filing separately (did not live with spouse): Full contribution if income is less than $146,000; partial contribution if income is between $146,000 and $160,999; no contribution if income is $161,000 or more.

What to Do if You Contribute Too Much

Contributing too much to your IRA or 401(k) can result in additional taxes. Excess contributions are taxed at 6% per year. To avoid this, withdraw the excess contributions and any earnings before the tax return deadline.

How to Withdraw Excess Funds

Contact your plan administrator or IRA provider for a corrective distribution. You will receive Form 1099-R, which shows the income generated from the excess contribution.

How Are Contribution Limits Determined?

The IRS reviews tax provisions annually for inflation, including retirement plan contribution limits. Adjustments are made based on the cost of living increases.

The Bottom Line

Maximizing your contributions to 401(k) and IRA accounts can help you reach your retirement goals faster. Following IRS guidelines ensures you get the maximum tax benefits without triggering additional taxes.

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