The IRS has officially announced the 401k and IRA contribution limits for the year 2024. Workers who contribute to a 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan can now contribute up to $23,000. This is an increase from the previous year's limit.
Employer matching contributions do not count towards the employee's contribution limit. However, the IRS does limit the combined total of employee and employer contributions to $61,000 for 2024. This means that individuals can receive up to $38,000 in employer matching contributions on top of their $23,000 personal contribution.
While the official IRS announcement will come next month, the contribution limit for retirement accounts is expected to increase from $23,000 to $24,000 in 2025. This change reflects a steady increase in contribution limits over the years.
Milliman, a leading consulting firm, has revised its prediction for the 2025 401(k) contribution limits. They have halved their initial forecast in the final prediction before the IRS announces the official limits. This adjustment suggests that the 2025 limits may not increase as much as previously predicted.
Starting in 2024, employees have the opportunity to contribute up to $23,000 into their retirement accounts. This includes 401(k), 403(b), most 457 plans, and the Thrift Savings Plan for federal employees. These tax-advantaged accounts provide individuals with a way to save for retirement while reducing their taxable income.
To contribute to a Roth IRA and take advantage of tax benefits, individuals must fall within the income limits set by the IRS. These limits determine who is eligible to contribute to a Roth IRA and benefit from tax advantages. It's important to stay informed about these income thresholds to maximize retirement savings.
Catch-up contributions are an additional opportunity for individuals aged 50 and older to save more money for retirement. These contributions allow older workers to contribute extra funds to their retirement accounts on a tax-advantaged basis. This can help boost retirement savings in the final years leading up to retirement.
