You Can Save More Money in Your Retirement Accounts in 2024

Good news for savers: The IRS announced yesterday that next year’s contribution limits for 401(k)s and other tax-advantaged retirement plans are being increased to account for inflation. Since it’s always a good idea to max out your retirement contributions, let’s take a look at what these new limits are for the 2024 tax year.

What’s changing for retirement savings in 2024

401(k) contributions

The amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023. This contribution limit applies to similar employer-sponsored retirement accounts as well, such as 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan for workers.

IRA contributions

The limit on annual contributions to an IRA will be $7,000 in 2024, up from $6,500 in 2023. These contribution limits apply to the grand total contributions you make each year to all your traditional and Roth IRAs.

Catch-up contributions

If you’re at least 50 years old, catch-up contribution rules let you add more money in your retirement savings accounts than the standard contribution limit for the year. Now, the catch-up contribution limit for employees aged 50 and over is an additional $7,500 for 2024. This gives anyone who delayed retirement contributions (or who haven’t begun saving yet) the ability to “catch up” before reaching retirement age.

IRA plans also allow catch‑up contributions for individuals aged 50 and over—that remains $1,000 for 2024. Combined with the $7,000 cap, this adds up to a total of $8,000 for workers age 50 and above.

What else to know

Remember that attempting to contribute more than the annual limit will result in a 6% penalty tax on the excess amount unless promptly removed. If you exceed contribution limits, you have until the tax filing deadline, plus extensions, to withdraw the excess contributions and any income they earned.

The bottom line is that these contribution increases are great news for your retirement planing. As always, you can and should max out these limits, if possible.

When it comes to retirement, the key is to start saving early (compound interest rules!) and utilize a mix of these accounts to build your retirement funds. Here are our guides to opening an IRA and opening a 401(k).