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Understanding the contribution limits for 401(k) plans is essential for maximizing retirement savings and ensuring compliance with IRS regulations. This article provides an overview of current limits and key considerations for participants.
Current Contribution Limits
The IRS sets annual contribution limits for 401(k) plans. For 2024, the standard limit is $23,000 for employee contributions. Participants aged 50 and older can make catch-up contributions of an additional $7,500, bringing their total to $30,500.
Additional Considerations
Employers may also contribute to employees’ 401(k) accounts through matching or profit-sharing contributions. The total combined contribution limit, including employee and employer contributions, is $66,000 for 2024, or $73,500 for those age 50 and above with catch-up contributions.
Important Deadlines and Rules
Contributions for a given year must be made by the tax filing deadline, typically April 15 of the following year. Participants should review their plan’s specific rules and consult with a financial advisor to optimize their contributions and avoid exceeding limits.