401(k) contribution limits for employees are increasing in 2024. Find out how much you can put away for retirement this year from the financial advisors at EP Wealth.
What Is the Individual 401k Contribution Limit for 2024?
You can possibly save more for retirement in 2024, thanks to recent IRS changes to employee contribution limits for 401(k), 403(b), and most 457 plans.
Contribution limits for employees increase to $23,000 in 2024. That total is up $500 from 2023. The limit on catch-up contributions for employees 50 and older remains unchanged at $7,500.
Additionally, the limit for employee-employer contributions will increase slightly from $66,000 in 2023 to $69,000 in 2024.
The maximum amount your employer can contribute will vary based on how they match your contributions. For example, some employers match dollar-for-dollar, while others can match a certain percentage of your contributions.
A financial advisor at EP Wealth can clarify the guidelines and restrictions for your individual 401(k).
Penalties for Contributing Too Much
Knowing your 401(k) contribution limit allows you to save as much as possible each year. But it’s equally as important to avoid overcontributing in 2024.
If you contribute more than $23,000 as an employee, you risk penalties that may include up to 10% in fines and unpaid income taxes on the excess contributions, for employees younger than 59.5 years old.
Fortunately, most 401(k) plans have built-in protections to prevent overcontributing. If you change jobs or have multiple plans, however, it is possible to lose track of your contributions.
If you do save too much, you must submit a request to return any additional funds (including earnings) as soon as possible. The excess deferral amount should be returned to you by April 15 of the following year. These funds are considered taxable income and should be reported on your tax return.
Are You on Track to Meet Your Retirement Goals? EP Wealth Can Help
The increase in employee contributions is just one of several important updates that may impact your plan for retirement. EP Wealth financial planners stay updated on changing guidelines that may require you to adjust your approach to retirement planning.
We take a comprehensive approach to financial planning, and we can potentially shift your retirement plan according to market changes and fluctuations in your salary and other income streams.
EP Wealth is here to guide you on your retirement planning journey. Inquire online to locate an advisor near you.
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