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What Are the 401(k) Contribution Limits for 2024?

What if you had access to the same type of investing account millionaires use to build their wealth? You’d jump on the chance, right? Well, you do! Believe it or not, millionaires don’t roll the dice on flashy investment trends. Nope! More than anything else, they invest money in their humble, unflashy 401(k) plan at work.

That’s right! According to The National Study of Millionaires, 8 out of 10 millionaires invested in their company’s 401(k) plan. They put money into their accounts month after month, year after year, until one day they looked up and their net worth was in the seven figures. And if they can do it, you can too!

Your 401(k) is an easy and effective (obviously!) way to put thousands of dollars away each year for retirement. So if you’re one of the millions of Americans with access to a 401(k), don’t take it for granted!

But just how much can you put into your 401(k) in 2024? Let’s take a look.

401(k) Contribution Limits for 2024

The 401(k) contribution limit is $23,000.

The 401(k) catch-up contribution limit for those age 50 and older is $7,500.

The limit for employer and employee contributions combined is $69,000.

The 401(k) compensation limit is $345,000.1

What Are the 401(k) Contribution Limits for 2024?

You can invest up to $23,000 in 401(k) plans in 2024, and anyone age 50 or older can put in an extra $7,500 as a “catch-up” contribution (that’s a grand total of $30,500 for those keeping score).2  

Those limits also apply to folks with 403(b)s, most 457 plans, and the government’s Thrift Savings Plan (TSP). In most cases, all your contributions to a 401(k) are due at the end of the calendar year.

And these contribution limits apply to traditional 401(k)s and Roth 401(k)s. Both are employer-sponsored retirement savings accounts, but they’re taxed differently. You put money into a traditional 401(k) before any taxes are taken out of your paycheck. That means you’ll get a tax break now, but you’ll pay taxes on withdrawals later on in retirement.

With a Roth 401(k), it’s the other way around! The money you put in has already been taxed, so it grows tax-free and you won’t have to pay any taxes when you take that money out in retirement. (For the record, if your company offers a Roth 401(k) option, take advantage of it! It just doesn’t get any better than tax-free growth!)  

What Is the Maximum an Employer Can Contribute to Your 401(k) in 2024?

Well, maybe there is one thing better than tax-free growth—and that’s free money! One of the best things about a 401(k) is that most employers offer some kind of match on your contributions, usually up to a certain percentage of your salary.

In fact, about 95% of 401(k) plans offer some sort of employer contribution on top of employee contributions.3 And the average employer 401(k) match is around 4.5% of your salary.4 For an employee who makes $50,000 a year, that’s an additional $2,250 dedicated to their retirement savings each year. That’s free money to help you build wealth! 

But there is a limit on how much you and your employer can put in together. Between you and your employer, the maximum that can be put into your 401(k) in 2024 is $69,000 ($76,500 if you add catch-up contributions, that limit rises to). 

Is There an Income Limit for Contributing to a 401(k)?

Not exactly. If you have access to a 401(k) plan at work, you can put money into it no matter how high or how low your salary is. But listen up, high-income earners: The IRS does limit how much of your salary and compensation is eligible for a 401(k) match.

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For 2024, the compensation limit (which is the amount of your income that’s used to figure out 401(k) contributions and matches) is limited to $345,000. So keep that in mind!

Here’s how it works. Let’s say you make $500,000 in 2024 and your company offers a 4% match on your 401(k) contributions. You contribute $23,000—the maximum amount you’re allowed to put into your 401(k) in 2024. But instead of matching that $23,000 (4% of $500,000 is $20,000), your employer only contributes $13,800. Why? Because your employer is only allowed to apply your match on up to $345,000 of your compensation, and 4% of $345,000 is $13,800.

No—it doesn’t really make sense. But don’t let that stop you from using all the tools you have to build wealth for the future!

How Much Should You Save for Retirement?

To start, invest 15% of your gross income into retirement savings accounts like a Roth 401(k) and Roth IRA. Spread your money evenly across four types of mutual funds—growth and income, growth, aggressive growth, and international—inside of those retirement accounts.  

And listen, we know you’re eager to start saving money for your retirement future . . . but if you’re still getting out of debt or need to get a solid emergency fund in place, now is not the time to save for retirement. Your income is your number one wealth-building tool, and you can’t take full advantage of it if it’s tied up in credit card or student loan payments.

So let’s say you’re out of debt with a fully funded emergency fund and you have an annual salary of $75,000. That means your goal is to save $11,250 each year for retirement. Where do you start? Let’s walk through it step-by-step.

1. Take the 401(k) match.

Does your workplace offer you a 401(k) with an employer match? That is the perfect place to start saving for retirement! Your first step is to invest up to the match into your 401(k).

So if you make $75,000 per year and your employer matches 5% of your contributions, you should invest your first 5% (which comes out to $3,750) into your 401(k) so you can get that match (aka free money!). And listen, do not count your employer’s match as part of your 15%. Think of the match as the icing on the cake and not part of the cake itself.

What about the remaining 10%? Well, if you have a Roth 401(k) and you like your investment options, then you could go on ahead and invest your entire 15% right there. Done! But if you only have a traditional 401(k), then it’s time to talk about the Roth IRA.

2. Contribute to a Roth IRA.

The Roth IRA is the peanut butter to the 401(k)’s jelly—they just go better together! The beautiful thing about the Roth IRA, which stands for individual retirement account, is that it lets you enjoy tax-free growth and tax-free withdrawals in retirement. There it is again! Tax-free . . . don’t you just love the sound of that?

In 2024, you can put up to $7,000 into a Roth IRA (and an extra $1,000 catch-up contribution if you’re age 50 or older).5 Sticking with our example above, maxing out your Roth IRA and investing $7,000 into your account brings your total retirement savings for the year to $10,750 . . . just a little bit short of your retirement savings goal.

So what are we going to do with the remaining $500? It’s time to send you back . . . back to the 401(k)!

3. Invest the rest in your 401(k).

If you invested up to the match in your 401(k), maxed out your Roth IRA and still haven’t hit 15%, don’t panic! You can still go back and invest the rest in your 401(k).

In this case, you’d invest the remaining $500 into your 401(k). Woo-hoo! You hit 15%!   

Work With a Financial Advisor

Whether you have questions about your 401(k) investment options or want to open up a Roth IRA, working with a financial advisor can go a long way. They can help answer all your investing questions and give you the guidance you need to start investing for retirement and building wealth.

Don’t have an advisor? We can help with that! Our SmartVestor program can connect you with up to five financial advisors who are ready to help you take the next step toward the retirement you’ve always dreamed about.

Ready to get started? Find your SmartVestor Pro today!

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This article provides general guidelines about investing topics. Your situation may be unique. If you have questions, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

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About the author

Ramsey

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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