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2024 Retirement Contribution Limits


Funneling money into a tax-advantaged account, such as an IRA or a 401(k) is a must if you’re banking on enjoying a comfortable retirement. These kinds of accounts offer a much higher rate of growth compared to a regular savings account. However, there’s a catch when it comes to how much you can save each year. The IRS routinely adjusts the annual retirement contribution limits for qualified retirement accounts. Here are the latest contribution limits for 2024.

A financial advisor can help you create a financial plan for your retirement needs and goals. 

Contribution Limits for Employer-Sponsored Plans

Retirement plans offered through your employer can either be defined benefit plans, such as a pension, or defined contribution plans, like a 403(b), 457 or 401(k) plan. If you’re enrolled in any of the above, you can defer up to $23,000 of your salary into your account for 2024, a $500 increase over 2023 limits. The maximum 401(k) contribution limit also applies to federal employees who participate in the Thrift Savings Plan. This cap doesn’t include employer matching contributions.

Although your company match is not included in maximum 401(k) contribution limits, the IRS does cap the total of your contributions and your employer’s contributions. For 2024, that cap is the lesser of either 100% of employee compensation or $69,000. Note that this $69,000 cap doesn’t include catch-up contributions, which can be up to $6,500 for those 50 or older, bringing the total limit to $76,500.

Defined benefit plans pay you a set amount of money once you retire, based on your annual salary and how many years of service you’ve racked up. Because of the cost involved, fewer companies are offering defined benefit plans. For those that are, the annual contribution limit per employee tops out at $275,000 for 2024, a $10,000 increase from 2023.

Contribution Limits for Self-Employed Savers

SmartAsset: 2023 Retirement Contribution Limits

When you own a business or you work as an independent contractor, you have to think outside the box a little in terms of how you can save for retirement. Two of the most common options available are SEP and SIMPLE IRAs. Which one you choose depends on your business structure and whether you have any employees, but generally, both plans offer more benefits than you’d get with a traditional IRA. For 2024, contributions to a SEP IRA cannot exceed 25% of the employee’s compensation or $69,000 — whichever is less. The contribution limit for a SIMPLE IRA is $16,000 in 2024.

If you own a sole proprietorship or your only employee is your spouse, a solo 401(k) may also be a good choice. The 2024 contribution limits are the same as a SEP IRA and your contributions grow on a tax-deferred basis.

Limits for Traditional and Roth IRAs

An IRA is an excellent choice for supplementing the amount you’re saving in an employer’s plan or building your nest egg when you’re not eligible to participate in a retirement plan at work.

With a traditional IRA, you get the benefit of deferring taxes on earnings and your contributions may be deductible. You fund a Roth IRA with after-tax dollars, which means you’ll pay no tax on qualified withdrawals. For 2024, the most you can put into either a traditional IRA, Roth IRA – or both – is $7,000 (up from $6,500 in 2023).

Catch-Up Contribution Limits

SmartAsset: 2023 Retirement Contribution Limits

In terms of saving for retirement, you’re better off starting sooner rather than later. However, the IRS recognizes that some people may put it off longer than others. In addition to regular contributions, certain savers can make catch-up contributions to boost their balances. The amount of the catch-up contribution varies based on what kind of retirement account you have.

For defined contribution plans, such as a 401(k), you can chip in an extra $7,500 in 2024 if you’re 50 or older. You can’t make catch-up contributions to a SEP IRA, but you can squirrel away an additional $3,500 to a SIMPLE plan if you’re 50 or older. If you’ve got a solo 401(k) or IRA, the limits are $7,500 and $1,000, respectively.

Income Phase-Out Limits

Your ability to deduct your traditional IRA contributions depends on how much you earn. The IRS is increasing the adjusted gross income phaseout limits for 2024.

If you have a traditional IRA and you participate in your employer’s retirement plan, the phase-out range if you’re single is $77,000 to $87,000. It’s between $123,000 and $143,000 if you’re married and file jointly. And if you are not covered by a workplace retirement plan but are married to someone who is covered, the phase-out range is between $230,000 and $240,000.

Savers who are planning to fund a Roth IRA also need to be aware of adjustments to the income cap. If you’re single or the head of your household, the income phase-out range is $146,000 to $161,000. The ceiling ranges between $230,000 and $240,000 for married couples filing jointly.

Scoring the Savers’s Credit

As an incentive to get more people to save for retirement, the IRS offers a special credit for people who make below a certain amount and contribute to an employer’s plan or IRA. The income limits used to qualify are going up slightly for 2024.

Single filers and married couples filing separately can claim at least a portion of the credit as long as their income doesn’t exceed $38,250 in 2024. The same applies to married couples filing jointly with an income up to $73,000 and heads of household with an income up to $57,3745.

Tips for Saving for Retirement

  • A financial advisor can help you create a financial plan for your retirement. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Maximize your employer’s 401(k) match, if one is offered. As illustrated by SmartAsset’s 401(k) calculator, employer contributions can seriously boost the value of your 401(k) over time. For instance, if your employer will match 50% of employee contributions up to 5% of your salary, you could snag $1,250 in employer contributions if you contribute $2,500 and earn $50,000 a year.
  • Consider your options. As indicated by the many contribution limits, you have numerous choices when it comes to saving for retirement. Do your research to make sure you’re making the best choice for your needs. Here’s a breakdown of IRAs vs. 401(k)s.
  • If you’re over the age of 50, take advantage of catch-up contributions. Catch-up contributions are a great way to boost your savings, whether you got a late start or haven’t saved as much as you’d hoped. Use SmartAsset’s retirement calculator to ensure you’re saving enough to retire comfortably.

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