New 401(k) Contributions Limits For 2024

401k contribution limits

It’s that time of year again. I’m not talking about the mad dash of surgeries we’re doing for those looking to cash in on their deductible being met. It’s time to increase your 401k contributions for 2024.

Every year the IRS looks at the cost of living increase (the result of inflation). Depending on what they find they make an adjustment to the contribution limits.

Looking at the 2023 pre-tax 401(k) limit we saw the biggest increase in years because inflation was out of control. Remember seeing that grocery bill skyrocket? The IRS increased the contribution limit by $2,000 to reflect the current market. 

So what does 2024 hold you and your retirement plans?

The 2024 Employee 401(k) Contribution Limits

Let’s talk about your 401(k) – that trusty savings vehicle for your retirement dreams. As of 2023, individual employees have been able to stash away a maximum of $22,500 into their 401(k) account each year, all before taxes.

But guess what? In 2024, the game is changing. The IRS has raised the limit, giving you the chance to contribute a whopping $23,000 – that’s an extra $500 to pad your retirement nest egg.

Now, how can you make the most of this increase? Simple. Start planning to contribute an additional $41.66 each month to your 401(k) starting in 2024. That’s less than a dinner out with friends, and it’s a small sacrifice for a more comfortable retirement.

These limits apply to you as an individual. So, if you’re juggling multiple employers, you can still contribute to separate 401(k) plans – just remember not to exceed the annual limit across all your accounts.

The 2024 Employee 401(k) Catch-up Contribution Limits

Now, let’s talk about the seasoned folks in the workforce – those aged 50 and older. In 2023 and 2024, they have an extra card up their sleeves – the catch-up contribution allowance. It’s a cool $7,500 you can add to your retirement fund. Think of it as a turbo boost for your savings engine. 

If you’re over 50, you have the chance to make up for lost time or simply accelerate your retirement savings. How much do you need to put aside? Well, for a savvy older worker, that’s around $2,541.60 per month or $1,270.80 per bimonthly paycheck. It’s a smart move to secure a more comfortable retirement, and it’s never too late to start.

The 2024 401(k) Limit for Employer Contributions

Now, let’s switch gears to employer-sponsored plans. Many employers sweeten the deal by offering matching contributions. They’re like your retirement fairy godmothers, magically turning your savings into a more substantial nest egg. Typically, employers match a percentage of your salary contribution, up to a certain limit.

In 2023, the overall annual contribution limit, including both individual and employer contributions, was set at $66,000. But in 2024, the ceiling has risen to a more generous $69,000. This boost in contribution limits presents a golden opportunity for individuals to supercharge their retirement savings and secure their financial future.

You’re In Control

Whether you’re just starting your 401(k) journey or looking to rev up your retirement savings engine, these new limits are your ticket to a more comfortable retirement. So, as you plan your financial goals for 2024, remember: seize the moment, maximize your contributions, and let your golden years shine brightly. Your future self will thank you for it!

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