The 401(k) contribution limit in 2024 is $23,000. Employees who are 50 and older can contribute an additional $7,500 as a catch-up contribution for a total of $30,500.
A 401(k) is a type of retirement savings plan that provides tax advantages, but there is a limit to how much you can contribute each year. This article covers what you need to know about 401(k) contribution limits this year and beyond.
Building a nest egg for retirement while saving on taxes is a win-win situation, and a 401(k) plan helps you to do just that. However, to make the most of your plan it is important to understand the contribution limits. These rules cap the amount of tax-advantaged dollars you can set aside in your 401(k) during a particular year. They were created to prevent high earners, who may be able to set aside large portions of their income, from gaining disproportionate tax advantages over those who earn less.
Related: What is a 401(k)?
Because 401(k) contribution limits often change, it’s important to review your contributions each year. If you are 50 or older, you should also review the catch-up contribution which is an additional amount you can set aside above the general limit.
For 2025, the employee contribution limit is $23,500 and the catch-up contribution limit is an additional $7,500 for investors aged 50 and older.
In addition, due to the Secure 2.0 Act, workers age 60-63 can instead contribute an additional $11,250 in catch up contributions in 2025.1
The IRS reviews contribution limits annually. The idea is to keep pace with inflation, but that doesn’t mean the limits increase every year. In 2024, the limits increased by $500, and in 2023, the limits rose by $2,000. However, from 2020 to 2021, they remained the same1.
Employer matching is not counted toward an employee’s contribution limit. However, there are overall limits that apply to combined employer and employee contributions. More information on these limits can be found at IRS.gov.
Contribution limits are often the same across 401(k)s with a couple of exceptions.
Solo 401(k) contribution limits
Self-employed individuals who don't have full-time employees (other than their spouse) can contribute to solo or individual 401(k)s to fund their retirement the way employer-sponsored plans do. In this case, the business owner can contribute both as the employer and the employee to reach the maximum allowable contribution.
Simple 401(k) contribution limits
Employers with 100 or fewer employees can opt for a Simple 401(k) plan, which has lower limits than a traditional 401(k) plan. More information on Simple 401(k) plans can be found at IRS.gov.
Roth 401(k)s and traditional 401(k)s are subject to the same contribution limit. The main difference between the two plans is that Roth 401(k) contributions are made with after-tax dollars and traditional 401(k)s are funded with pre-tax dollars. This difference determines when you realize the plan’s tax benefits.
Roth 401(k) tax benefits are realized in the future since you will not owe taxes on the money or its growth when you make withdrawals during retirement. On the other hand, traditional 401(k)s provide more upfront tax benefits. Under the traditional plan, your current taxable income is lowered by the amount of the contributions, and you only pay taxes on this money when it is withdrawn.
It is possible, and permissible, to contribute to more than one 401(k) plan at the same time. However, there is only one contribution limit. So, no matter how many plans you have, all combined contributions must meet or fall under the limit.
Once you reach the 401(k) contribution limits, you can still put away money for retirement with other tax-advantaged savings options.
Setting aside as much as possible for retirement is a smart move, and it’s generally advised to meet your employer’s matching contributions whenever possible. After that, you can continue contributing to your 401(k) up to the contribution limit or explore other retirement savings options.
When trying to figure out the best strategy for your needs, it may be helpful to consult a financial services professional, who can help you decide how to best balance your savings between a 401(k) and other retirement plans.
Individual retirement accounts provide similar tax benefits as 401(k)s. Traditional IRAs are funded with pre-tax dollars, while Roth IRAs allow you to save after-tax dollars that can be withdrawn tax-free during retirement.
Fixed deferred annuities are insurance products that can help you convert current savings into a guaranteed income stream in the future. The steady payments they provide can help you avoid dipping into other savings during retirement. Annuities are subject to fees and charges. Surrender charges may apply.
Whole life insurance is a life insurance policy that offers several benefits like premiums that will not increase, tax deferred growth of cash value that can be accessed during your life when you need it. Accessing cash value will reduce the death benefit and available cash surrender value.
If you exceed the 401(k) contribution limit, it is important to contact your plan administrator as soon as possible. Excess contributions may require amended tax filings, and if not handled promptly, could result in double taxation and early distribution penalties. Information on what to do if you exceed the limit can be found at IRS.gov.
The 401(k) contribution limit in 2024 is $23,000. Employees who are 50 and older can contribute an additional $7,500 as a catch-up contribution for a total of $30,500.
The 401(k) contribution limits increase periodically to keep up with inflation. Although the IRS reviews the limits annually, they don’t necessarily increase every year.
Contribution limits do not increase with salary. In fact, a very high salary can trigger higher restrictions.
Contribution limits were created so that 401(k) tax benefits do not disproportionately favor high earners over those who earn less.
Taxpayers who are 50 or older are allowed to make an additional catch-up contribution above the annual limit.
We can answer all your questions and discuss ways to optimize your retirement strategy.
1“401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000,” IRS, 2025
This article is provided for informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.