What is the maximum contribution to your 401k in 2024?

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In a nutshell

A 401(k) retirement savings plan can be a powerful tool to help you save for your future in a tax-advantaged way, but it’s important to avoid overcontributing.

  • The IRS sets a maximum contribution limit for how much money employees can put into their 401(k)s, as well as a limit for how much an employer and employee can contribute combined.
  • If you contribute more than the limit, you may be subject to double taxation on the extra amount.
  • Contributions to traditional 401(k)s are tax-deferred, meaning you won’t pay taxes on the money you put into these accounts until you withdraw from them in retirement.

How does a 401(k) contribution work?

A 401(k) plan is offered by employers to their employees as a way for workers to set money aside for retirement. Typically, you decide on the amount you contribute as a percentage of your paycheck.

Contributions to traditional 401(k)s are tax-deferred, meaning you don’t pay taxes on the money that goes into your account. Instead, you’ll pay the taxes when you withdraw the money when you’re at least age 59½. At that point, you may be in a lower tax bracket than you were when you were working, so you’ll pay less tax overall. Roth 401(k)s work the opposite way: Contributions are made with after-tax dollars, and you won’t owe taxes on the money when you withdraw it after age 59½.

With both types of 401(k)s, your employer may match your contributions. For every $1 you pay into your 401(k), your employer will also contribute $1 up to a predefined maximum. While it’s possible to access the money in your 401(k) earlier, you’ll likely pay an early withdrawal penalty of 10% of the account balance if you do.

How much should you contribute to your 401(k)?

Your specific 401(k) contribution is up to you and depends on your income, expenses and other financial goals. But it’s a good idea to contribute the minimum amount to get your employer’s full match.

Beyond that, Fidelity Investments recommends saving up to 15% of your pretax income for retirement, including employer contributions. If that figure seems unattainable, start smaller and try to increase your contribution over time. Many 401(k) accounts allow you to set up automatic annual contribution increases.

What is the basic contribution limit for 401(k)s?

In 2024, employees can contribute up to $23,000 to their plans. But if you’re age 50 or older, you can tack on an additional catch-up contribution of $7,500, bringing the total amount you can contribute as an employee to $30,500.

If you put in too much money, excess deferrals might be subject to double taxation: once during the contribution year and again when you withdraw the money. The money may also be subject to the 10% early withdrawal penalty if it’s pulled out too soon.

However, if you fix the error in a timely manner — before April 15 of the next year — you can avoid double taxation. Contact your plan administrator as soon as you realize you’ve contributed too much to adjust the amount. Remember that you’ll have to pay income tax on any earnings made from excess contributions.

Employer matching contributions

Many employers will offer to match your contributions up to a certain limit. For example, if your employer offers a 3% employer match, you’ll get that match when you contribute at least 3% of your overall paycheck to the 401(k). Even if you contribute 5%, the employer still only contributes 3%.

The IRS also sets limits on how much you and your employer combined can contribute to your 401(k). In 2024, employees and employers can contribute a combined maximum of $69,000 (or $76,500 if the employee is age 50 or older).

You may need to work at a company for a certain amount of time for the money to become “vested” or fully yours. Vesting periods are commonly between three and five years, according to retirement plan provider Empower, but it can vary.

Check with your employer if you’re unsure about your plan’s vesting requirements.

What are the tax advantages of maxing out a 401(k)?

While you want to make sure you’re contributing the amount that makes sense for you and your financial situation — and not exceeding IRS limits — there are some notable tax benefits to maxing out your 401(k).

Lower your tax bill

Investing in a 401(k) doesn’t just help you save for retirement; it can also help lower your taxable income and tax bill. When you make a contribution to a traditional 401(k), you can deduct that amount from your taxable income within that year. If you max out your 401(k), you can deduct that entire contribution on your tax bill. In short, the more you contribute to your 401(k), the less tax you’ll pay that year.

Tax-deferred growth

When you invest in a 401(k), you don’t have to pay taxes on your contributions until you withdraw them in retirement. The same goes for dividends and capital gains, which means your money grows without tax implications until it’s time to withdraw. So the more you contribute, the higher your returns are likely to be.

401(k) contribution mistakes to avoid

Not contributing

Investing in a 401(k) is a solid way to set yourself up for a comfortable retirement. Electing not to contribute to keep more of your paycheck today might set you back in retirement when you’re not earning as much money.

If you have access to a 401(k), it’s a good idea to invest, since you’re not only benefiting from the power of the financial markets but also tax advantages and a likely employer match. Your 401(k) administrator or tools like WiserAdvisor.com can connect you with financial advisors if you need guidance on how much to contribute.

Missing out on your employer match

Financial advisors recommend contributing at least enough of your paycheck to get your full employer match, if you have one. Otherwise, you’re leaving free money on the table.

Contributing too much

On the other hand, avoid contributing beyond the annual limits so you aren’t hit with IRS penalties. If you do, address the error as soon as possible.

Forgetting about your 401(k) when you leave a company

If you quit your job or are laid off, don’t forget about your 401(k). While you don’t necessarily have to move the funds, consider your options. You can do a 401(k) rollover and move the money to a retirement savings account with your new employer or to an individual retirement account (IRA).



  • Find your old 401(k)s, 403(b)s
  • Find 401(k)s hidden fees
  • Rollover to better retirement accounts
  • Unlock old 401(k)/IRA accounts

Not designating beneficiaries

Make sure to name primary and contingent beneficiaries on your 401(k) account. If you die, the funds in your account will transfer to your named beneficiaries in order of precedence. (Primary beneficiaries come before contingent beneficiaries.) If you don’t name any beneficiaries, your 401(k) money could wind up as part of your estate and be subject to creditor claims during the probate process.

The AP Buyline roundup

Your future self will thank you for investing in a 401(k). These retirement savings accounts not only allow you to take advantage of growth in the financial markets, they also come with tax advantages and free money through an employer match.

Make sure you don’t overcontribute to your 401(k), though. The IRS sets maximum contribution limits annually, and exceeding them could mean facing double taxation and a 10% penalty if you withdraw those funds before age 59½.

Frequently asked questions (FAQs)

Can I contribute 100% of my salary to my 401(k)?

Contributing 100% of your salary to your 401(k) isn’t realistic, since you can only contribute up to the contribution limits.

Is there a max I can contribute to my 401(k)?

In 2024, you can contribute up to $23,000 if you’re under age 50 and $30,500 if you’re age 50 or older.

Can I change my contribution amount throughout the year?

Yes, you can typically change your contribution amount throughout the year, but whether you’re able to — and how often — depends on your plan’s rules.

Are there penalties for exceeding contribution limits?

If you contribute more than the IRS allows, the excess money may be subject to double taxation and a 10% early withdrawal penalty.

Does 401(k) max include employer match?

There are separate limits for how much you can contribute as an employee and how much you and your employer can contribute together. In 2024, employees under the age of 50 can contribute up to $23,000, and $30,500 if you’re age 50 or older. Employees and employers can contribute a combined $69,000 (or $76,500 if the employee is age 50 or older) for the year.

How often does the IRS change 401(k) contribution limits?

The IRS sets contribution limits annually to account for inflation.