Washington, D.C. – The IRS has announced higher contribution limits for 401(k) retirement plans in 2024. The contribution limit will increase from $22,500 to $23,000, giving workers more flexibility to save for retirement.
The IRS raises contribution limits periodically to account for inflation. This latest increase is welcome news for savers who want to maximize their tax-advantaged retirement contributions.
“The new 401(k) limits allow people to sock away more money in these accounts, which is great for retirement security,” said John Smith, a certified financial planner. “Workers should take advantage of this increase if they can afford to do so.”
The catch-up contribution limit for workers aged 50 and over remains unchanged at $7,500. Older workers nearing retirement can contribute this extra amount above the general limit to supercharge their savings.
Strategies to make the most of increased 401(k) limits:
- Increase your contribution percentage to maximize the new $23,000 annual limit
- Take advantage of employer matching contributions for free extra savings
- Use catch-up contributions if age 50+ to save an additional $7,500 per year
Smith reminds savers that contributing to a 401(k) has many benefits beyond building your nest egg. “401(k) contributions reduce your taxable income for the year, and your savings grow tax-deferred until retirement,” he said. “It’s one of the best ways for most people to save for the future.”
