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The New 401(k) Contribution Limits: How to Maximize Your 401(k) in 2024

The employer-sponsored 401(k) plan is a fantastic avenue for saving towards retirement. It comes with both short- and long-term tax advantages, the potential perk of an employer match, and generous 401(k) contribution limits.

“The IRS does put a cap on how much you can contribute to your 401(k) annually. So, if you’re eyeing this route for your retirement savings, it’s crucial to grasp your contribution limits and explore ways to maximize your 401(k),” says Michael Norton, Senior Vice President, Investments at David Lerner Associates, Inc.

“At David Lerner Associates, we believe in empowering individuals to make informed decisions about their retirement, Norton adds.”

In this comprehensive guide, we will unravel the intricacies of the new 401(k) contribution limits for 2024 and provide insights on how to maximize your retirement savings.

401(k) Contribution Limits for 2024

Understanding the contribution limits is fundamental to crafting an effective retirement strategy.

In 2024, the 401(k) contribution limits have two components: the employee contribution limit and the combined limit, which includes both employee and employer contributions.

  1. Employee Contribution Limit

The IRS allows an individual to contribute up to $23,000 to their 401(k) plan in 2024, a slight increase from the previous year’s limit of $22,500.

2. Employer Contribution Limit

Employers often contribute to their employees’ 401(k) plans, typically through matching contributions. Employer contributions, however, do not count toward the employee’s annual contribution limit.

The combined contribution limit, including both employee and employer contributions, is set at $69,000 or 100% of your salary, whichever is lower. This is an increase from $66,000 in 2023.

401(k) Catch-Up Contribution Limit for 2024

For those aged 50 and above, the catch-up contribution limit allows for an additional $7,500 (which is the same as the 2023 limit), bringing the total contribution limit to $30,500.

This provision recognizes the importance of accelerated savings as retirement approaches.

The general limit on total employer and employee contributions for 2024 with catchup is $76,500.

Leveraging catch-up contributions is a strategic move that our financial advisors often recommend to clients seeking to boost their retirement funds in the final years of their careers.

Can I Contribute 100% of My Salary to a 401(k)?

While the contribution limits are substantial, contributing 100% of your salary is not feasible (unless your earnings are below $23,000).

The IRS caps the annual contribution amount, preventing an individual from overcommitting.

A financial advisor can guide you on determining an optimal contribution rate that aligns with your financial goals.

Is an Employer Match Part of the 401(k) Limit?

Many employers offer a matching contribution, and by not capitalizing on this benefit, you’re essentially passing up on free money.

Employer matches do not count toward your individual contribution limit. These are additional funds contributed by your employer to support your retirement savings.

Financial experts emphasize the importance of taking full advantage of employer matches, as they present an opportunity to enhance your retirement portfolio without affecting your personal contribution limit.

Can I Contribute to Multiple 401(k) Plans?

For individuals with multiple jobs or those working for companies offering different 401(k) plans, contributing to more than one plan is possible.

However, the aggregate contributions across all plans must adhere to the IRS limits ($23,000 total).

Ways to Maximize Your 401(k) Contributions

Maximizing your 401(k) contributions is not just about contributing the maximum allowed; it involves a thoughtful and strategic approach considering your financial context and long-term goals.

Steps for Effective 401(k) Planning

  1. Financial AssessmentBefore setting contribution targets, conduct a comprehensive evaluation of your financial situation.This includes understanding your income, expenses, debts, and overall financial goals.
  2. Realistic Goal SettingEstablish realistic and achievable goals for your 401(k).Consider factors such as your retirement age, desired lifestyle, and potential expenses during retirement. Your goals should align with your broader financial plan.
  3. Strategic AllocationAllocate your contributions strategically.This involves distributing your contributions among different investment options based on your risk tolerance, time horizon, and overall investment strategy.
  4. Employer MatchesTake full advantage of employer matches.If your employer offers to match a percentage of your contributions, contribute at least enough to maximize this benefit. It’s essentially free money that can significantly boost your retirement savings.
  5. Regular ReassessmentPeriodically reassess your contributions.Your financial situation, goals, and market conditions may change over time. Regular reviews ensure that your contributions remain aligned with your evolving circumstances.
  6. Catch-Up ContributionsIf you’re aged 50 or above, explore catch-up contributions.The IRS allows individuals in this age group to contribute additional amounts to their 401(k). This is especially beneficial as you approach retirement to accelerate your savings.
  7. Advisor ExpertiseSeek advice from financial advisors who specialize in retirement planning.Professional guidance can help tailor a strategy that aligns with your unique circumstances. Advisors can provide insights into market trends, investment options, and adjustments needed for your 401(k) plan.

What Happens if I Contribute Too Much to My 401(k)?

Should you realize you’ve overcontributed to your 401(k) before the tax filing deadline, promptly inform your employer and plan administrator. They can rectify the excess contribution by returning the surplus funds, and you’ll receive a revised W-2, with taxes adjusted based on the corrected taxable wages.

Exceeding the annual contribution limits can have tax implications. It’s essential to monitor your contributions throughout the year to avoid penalties.

How Often Does the IRS review 401(k) Contribution Limits?

The IRS periodically reviews and adjusts contribution limits based on economic factors and inflation (mostly annually).

Changes are not frequent, but staying informed is vital for effective retirement planning.


Embarking on a journey toward financial freedom involves strategic planning, and one cornerstone of that plan is your 401(k).

The new 401(k) contribution limits for 2024 present both challenges and opportunities for individuals planning for retirement.

At David Lerner Associates, we are committed to navigating these complexities with you. By understanding the limits, strategically planning contributions, and leveraging catch-up provisions, you can pave the way for a financially secure retirement.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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