Understanding 401(k) contribution limits can be confusing even sometimes overwhelming. They are, however, essential to know. Below is a break down of important contribution limits that help employees determine whether their savings are on track or if there is an opportunity to catch up. The annual contribution limit is a great goal to keep in mind. It also encourages individuals who are able to defer additional funds into retirement savings to take advantage of doing so.
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Employee Contribution Limit | $23,000 | $22,500 | $20,500 |
| Employee Catch-Up Contribution (For employees aged 50 and over) |
$7,500 | $7,500 | $6,500 |
| Total Contribution Maximum for Defined Contribution Plan | $69,000 | $66,000 | $61,000 |
| Annual Compensation Limit | $345,000 | $330,000 | $305,000 |
| Individual IRA Annual IRA Contribution | $7,000 | $6,500 | $6,000 |
| Individual IRA Catch-Up Contribution | $1,000 | $1,000 | $1,000 |
| Annual Maximum Benefit Under Defined Benefit Plan | $275,000 | $265,000 | $245,000 |
| Highly-Compensated Employee | $155,000 | $150,000 | $135,000 |
| Social Security Wage Base | $168,600 | $160,200 | $147,000 |
| Simple IRA | $16,000 | $15,500 | $14,000 |
| Simple IRA Catch-Up | $3,500 | $3,500 | $3,000 |
2024 IRS TAX SAVERS CREDIT1
Certain employees may be able to take a tax credit for making eligible contributions to the company’s retirement plan. An employee can generally take the credit if they are:
- Age 18 or older;
- Not a full-time student; and
- Not claimed as a dependent on another person’s return.
More information about the Tax Savers Credit can be found in IRS Form 8880.
The amount of the credit is 50%, 20% or 10% of the employee’s retirement plan contributions up to $2,000 ($4,000 if married filing jointly), depending on their adjusted gross income that is reported on their Form 1040 or 1040A. The chart below shows the amount of the credit, depending on adjusted gross income and tax filing status.
| How Much the Credit is Worth | Married Filing Jointly | Head of Household | All Other Tax-Filing Statuses |
|---|---|---|---|
| 50% of your contribution | AGI < $46,000 | AGI < $34,500 | AGI < $23,000 |
| 20% of your contribution | $46,001 – $50,000 | $34,501 – $37,500 | $23,001 – $25,000 |
| 10% of your contribution | $50,001 – $76,500 | $37,501 – $57,375 | $25,001 – $38,250 |
| 0% of your contribution | more than $76,500 | more than $57,375 | more than $38,250 |
Questions? Email clientservices@htlfrps.com.
1For your specific situation, please consult with your tax advisor.
Products offered through HTLF Retirement Plan Services are not FDIC insured, are not bank-guaranteed, and may lose value, unless otherwise stated