Max 401k Contribution for 2024 With Catch Up Limits

An employer-sponsored 401(k) plan is a common tool for retirement savings, allowing employees to invest a portion of their paycheck for the future. The Internal Revenue Service (IRS) establishes annual limits on the amount that can be contributed to these accounts. These limits are subject to cost-of-living adjustments, meaning they can change from year to year.

2024 Employee Contribution Limit

For the 2024 tax year, the maximum amount an employee can contribute to their 401(k) from their salary is $23,000. This cap applies to all employee contributions, regardless of whether they are made to a Traditional 401(k) on a pre-tax basis or to a Roth 401(k) on a post-tax basis.

It is important for savers to recognize that this $23,000 limit is a combined total across all their 401(k) plans. An individual cannot contribute the full amount to both a Traditional and a Roth 401(k) in the same year. For example, if an employee contributes $15,000 to a Traditional 401(k), they can only contribute up to $8,000 to a Roth 401(k) within the same year.

Exceeding this limit can lead to tax consequences. The excess contributions are subject to income tax in the year they were deferred and may be taxed again when distributed if not corrected in a timely manner. Plan administrators typically monitor these contributions to prevent overages, but the ultimate responsibility for staying within the legal limits rests with the employee, especially if they contribute to multiple plans.

2024 Catch-Up Contribution Rules

Savers who are age 50 or over at any point during the calendar year are eligible to make additional contributions beyond the standard employee limit. For 2024, the catch-up contribution amount is $7,500. When combined with the standard limit, an eligible individual can contribute a total of $30,500 from their own salary in 2024 ($23,000 standard limit + $7,500 catch-up).

The option to make these contributions must be permitted by the specific 401(k) plan. While most plans offer this feature, it is not universally required. Participants should verify with their plan administrator to confirm their ability to make these additional deferrals.

A provision in the SECURE 2.0 Act of 2022 was set to change how some catch-up contributions are treated. The rule would have required participants who earned more than $145,000 in the prior year to make their catch-up contributions on a Roth (after-tax) basis, starting in 2024. However, the IRS issued Notice 2023-62, which delayed the implementation of this requirement. As a result of this two-year administrative transition period, all eligible participants, regardless of income, can continue to make catch-up contributions on a pre-tax basis through the end of 2025.

Overall Contribution Limit

Beyond the limits on employee-only contributions, there is a separate, higher cap on the total annual additions to a 401(k) account. For 2024, this overall limit is $69,000. It includes the employee’s elective deferrals, any employer matching contributions, and other employer inputs like profit-sharing contributions.

This comprehensive limit is established under Internal Revenue Code section 415. For those eligible for catch-up contributions, the total limit is increased by the catch-up amount, reaching $76,500 for 2024 ($69,000 overall limit + $7,500 catch-up). The total contributions cannot exceed 100% of the participant’s annual compensation.

To illustrate, consider an employee under age 50 who contributes the maximum $23,000 to their 401(k). If their employer provides a matching contribution of $10,000 and a profit-sharing contribution of $5,000, the total annual addition would be $38,000. This amount is well below the $69,000 overall limit for 2024, leaving room for additional employer contributions.