401(k) Contribution Limits for 2024

The 401(k) contribution limit is set by the IRS and has been set to $23,000 for 2024. In 2023, the 401(k) contribution limit was $22,500. The $500 increase is smaller than in previous years, but it is still a positive step for savers!

Even though the increase is small, it is important to remember that every dollar you save for retirement counts. By contributing the maximum amount to your 401(k) plan each year, you can take advantage of tax-deferred growth and build a nest egg that will help you live comfortably in retirement.

To max out your 401(k) with a contribution limit of $23,000 in 2024, here's how much you'd need to save based on different paycheck periods:

Monthly paychecks: $23,000 / 12 months = $1,916.67 per monthly pay period.

Bi-weekly paychecks: $23,000 / 26 pay periods = $884.62 per pay period.

But even if you can’t max out your 401(k) contribution, consistently investing money in your account every year can help you achieve financial security in retirement. 

Why do 401(k) contribution limits change every year?

The 401(k) contribution limit changes every year to account for inflation. The Internal Revenue Service (IRS) adjusts the limits annually based on the Consumer Price Index for All Urban Consumers (CPI-U). The CPI-U is a measure of inflation that tracks the prices of a basket of goods and services that are commonly purchased by households.

The IRS adjusts the 401(k) contribution limits to ensure that savers are able to keep up with inflation and continue to save enough for retirement. For example, if the CPI-U increases by 5% in one year, the IRS will typically increase the 401(k) contribution limit by 5% as well.

In addition to adjusting for inflation, the IRS also considers other factors when setting the 401(k) contribution limits, such as the overall health of the economy and the needs of savers. For example, in recent years, the IRS has increased the 401(k) contribution limits at a faster rate than inflation to help savers catch up on retirement savings.

The 401(k) contribution limits are only one factor to consider when saving for retirement. Other important factors include your age, income, expenses, and risk tolerance. 

What are the 2024 contribution limits?

The IRS announced annual changes to the contribution limits for a number of tax-advantaged retirement accounts:

• 401(k) contribution limit: $23,000 (up $500 from 2023)
• 403(b) contribution limit: $23,000 (up $500 from 2023)
• 457(b) contribution limit: $23,000 (up $500 from 2023)
• 415(b) defined benefit plan annuity limit will increase to $275,000 from $265,000.
• 415(c) contribution limit will increase to $68,000 from $66,000. Could reach $69,000, if significant inflation occurs in August and September.
• Catch-up contribution limit: $7,500 (unchanged from 2023)
• Starter 401(k) contribution limit: $6,000
• Catch-up contribution limit: $1,000
• IRA contribution limit: $7,000 (up $500 from 2023)
• Catch-up contribution limit for IRAs: $1,000 (unchanged from 2023)

Related Reading: Your Guide to the New Starter 401(k) Plans

What do these projections mean for you?

If you are able to contribute the maximum amount to your retirement plan in 2024, you will be able to save even more for your retirement. By increasing the contribution limits each year, the IRS encourages people to invest more in their retirement accounts.

If you are unable to contribute the maximum amount, even investing a small amount can make a big difference over time. For example, if you contribute $50 per week to your 401(k), you will save over $2,600 per year and over $245,000 over 30 years, assuming a 7% annual return. You can do your own math by using a 401(k) calculator to see how much you need to save each paycheck to achieve your retirement goals.

No matter how much you can afford to save, it is important to start saving for retirement early. The earlier you start saving, the more time your money has to grow.

SECURE 2.0 Changes to Catch-Up Retirement Plan Contributions

SECURE 2.0 is introducing big changes to catch-up retirement plan contributions in the next few years.

Starting in 2026, taxpayers who earn over $145,000 per year and want to make catch-up contributions will have to do so with after-tax dollars in a Roth account. If you earn $145,000 or less, you will be exempt from the Roth requirement. Many employers don't currently offer a Roth 401(k) plan, and setting them up can take time. Employers that want to offer this option to their employees should start planning now.

As of January 2025, taxpayers between the ages of 60 and 63 will be able to make a special catch-up contribution. This contribution will be limited to the greater of $10,000 or 150% of the standard catch-up contribution for 2024. 

Originally, the changes to catch-up contributions were supposed to happen in 2024, but the IRS announced in August 2023 that it was pushing back the deadline to 2026.

What do these changes mean for you?

If you earn over $145,000 per year and want to make catch-up contributions in 2026, you'll need to make sure your employer offers a Roth option. If they don't, you won't be able to make catch-up contributions.

If you're between the ages of 60 and 63 in 2025, you'll be able to make a special catch-up contribution. This is a great opportunity to save more for retirement, especially if you're behind on your savings goals.

No matter what your income or age, it's important to make catch-up contributions if you can. Catch-up contributions are a great way to boost your retirement savings and reach your financial goals.