401(k) Contribution Limits 2024: Rules and Calculator - NerdWallet (2024)

The 401(k) plan is fundamental to retirement planning for many Americans, but there is an annual limit to how much can be contributed. The IRS typically adjusts the contribution amount each year to reflect the pace of inflation.

In 2024, employees can contribute up to $23,000 to a 401(k) plan, a $500 increase from 2023. People aged 50 or older can take advantage of an additional catch-up contribution.

For most individuals, the last day to contribute to a 401(k) is December 31.

401(k) contribution limits 2024

The 401(k) contribution limit for 2024 is $23,000 for individuals under the age of 50. The combined limit for employee and employer contributions is $69,000.

Individuals who are 50 or older can add an extra $7,500 as a catch-up contribution, increasing their contribution limit to $30,500. The combined employee and employer contribution limit for this age group is $76,500.

Beinning January 2025, people ages 60 to 63 will be able to make catch-up contributions of $10,000, and the limit will be indexed for inflation.

The maximum 401(k) contribution limit for combined employee/employer contributions can't exceed the above limits or 100% of employee compensation. Contributing more can result in penalties if not addressed.

Roth 401(k) contribution limits

The contribution limits for a Roth 401(k) plan are the same as with a traditional 401(k). If you have access to both accounts, you can contribute to each one as long as your cumulative contributions don't exceed the maximum 401(k) contribution limit.

401(k) max contribution limits for highly compensated employees

Individuals who earn a high salary may be classified as highly compensated employees (HCEs) by the IRS. An employee is considered an HCE if they pass one of the tests below:

To ensure that HCEs don't benefit disproportionately to non-highly compensated employees, the IRS requires nondiscrimination testing for all 401(k) plans.

The two key tests are the Actual Deferral Percentage (ADP) test, which compares salary deferral rates between the two groups, and the Actual Contribution Percentage (ACP) test, which focuses on employer matching and after-tax contributions.

If the test determines that people across compensation levels aren't participating in a manner the IRS deems proportionate, employee contribution levels for highly compensated employees can be lowered. In these cases, your employer may need to return some of your excess contributions.

After-tax 401(k) contribution rules

If you've maxed out your 401(k) contribution for the year as an individual, but your employer's contributions haven't met the combined limit, you may be able to make an after-tax 401(k) contribution (depending on your employer's plan provider).

After-tax contributions to a 401(k) plan refer to additional contributions employees can make after reaching their pre-tax or Roth contribution limits. Unlike pre-tax contributions, after-tax contributions do not reduce your taxable income in the year they are made, but they can still grow tax-deferred.

Additionally, they can be part of a mega backdoor Roth conversion, where these after-tax contributions are rolled into a Roth IRA, allowing future earnings to grow tax-free and providing tax-free withdrawals in retirement

Frequently asked questions

What happens if I exceed my 401(k) limit by mistake?

If you contribute too much to your 401(k) and notice your mistake before the tax filing deadline, you can probably correct it with your employer. You’ll need to notify your plan administrator. If your plan allows excess deferral distributions, the plan administrator will return the money and any earnings to you and file a 1099-R for the year the excess contribution was distributed.

If you don’t catch the mistake before the tax-filing deadline, you may have to pay taxes twice on the amount you contributed over the limit. That’s because the excess contribution is taxable in the year it was made and because the IRS will still count that money as taxable in the year it’s distributed, too. Any earnings are also taxable in the year they are distributed, the agency says.

Does my employer match count toward 401(k) limits?

No, your employer match does not count towards your individual 401(k) contribution limit.

However, there is a combined employee and employer 401(k) contribution limit, and the total combined contributions can't exceed this limit. The 2024 combined limit for employee and employer contributions is $69,000 for those under 50 and $76,500 for those 50 and older.

Can I have a 401(k) and an IRA?

Yes. You can have both a 401(k) and an IRA. IRAs can be a good supplement to retirement savings, especially if you’re contributing enough to receive a full match from your employer or you plan on maxing out your 401(k).

The annual contribution limit for an IRA in 2024 is $7,000 for those under 50, or $8,000 if you’re 50 or older. In contrast to a 401(k), you can make contributions to a 2024 IRA for the current year until the tax filing deadline in 2025.