401(k) Contribution Limit 2024: How to Maximize Your $23,000 Cap

Every year, the IRS adjusts retirement account contribution limits for inflation — and 2024 brings modest but meaningful increases across the board. If you’ve been maxing out your 401(k) at $22,500, you can now put away an extra $500 per year. Combined with the IRA limit increase, the total tax-advantaged space available in 2024 is $30,000 for workers under 50 and $38,500 for those 50 and older.

Here’s a complete breakdown of every limit that changed and strategies to make the most of them.

2024 Contribution Limits at a Glance

Account Type	2023 Limit	2024 Limit	Change
401(k), 403(b), 457, TSP — employee	$22,500	$23,000	+$500
Catch-up (50+) for 401(k)	$7,500	$7,500	No change
Total 401(k) with catch-up (50+)	$30,000	$30,500	+$500
401(k) combined limit (employee + employer)	$66,000	$69,000	+$3,000
Traditional / Roth IRA	$6,500	$7,000	+$500
IRA catch-up (50+)	$1,000	$1,000	No change
Total IRA with catch-up (50+)	$7,500	$8,000	+$500
SIMPLE IRA — employee	$15,500	$16,000	+$500
SEP-IRA	$66,000	$69,000	+$3,000

How the $23,000 Limit Affects Your Paycheck

Contributing to a traditional 401(k) reduces your gross taxable income. The more you contribute, the less federal (and usually state) income tax is withheld from each paycheck — which partially offsets the take-home pay reduction.

Example: $80,000 Salary, 22% Federal Tax Bracket

Scenario	Monthly 401(k)	Gross Pay	Taxable Income	Federal Tax	Approximate Take-Home
No 401(k)	$0	$6,667	$6,667	~$1,090	~$5,177
Contributes 10%	$667	$6,667	$6,000	~$943	~$4,657
Maxes out ($23K/yr)	$1,917	$6,667	$4,750	~$721	~$3,629

The employee maxing out at $23,000/year reduces take-home pay by about $1,548/month compared to contributing nothing — but the actual cost to their monthly budget is reduced because of the $196/month in federal tax savings (at 22% marginal rate).

To see the exact impact on your take-home, use the paycheck calculator and enter your pre-tax 401(k) contribution amount.

The IRA Increase: $7,000 in 2024

The IRA contribution limit rises from $6,500 to $7,000 for 2024. This $500 increase applies to both traditional and Roth IRAs, but the limits are cumulative — you can’t contribute $7,000 to a Roth and $7,000 to a traditional IRA in the same year. Your combined contributions across all IRAs cannot exceed $7,000.

Roth IRA Income Limits for 2024

Filing Status	Phase-Out Begins	Phase-Out Ends
Single / Head of Household	$146,000	$161,000
Married Filing Jointly	$230,000	$240,000
Married Filing Separately	$0	$10,000

If your income exceeds the phase-out end, you cannot contribute directly to a Roth IRA. However, the backdoor Roth IRA strategy (contribute to a traditional IRA, then convert) remains available regardless of income.

Traditional IRA Deductibility for 2024

If you (or your spouse) are covered by a workplace retirement plan, the deductibility of traditional IRA contributions phases out:

Filing Status	Phase-Out Begins	Phase-Out Ends
Single (covered by workplace plan)	$77,000	$87,000
Married (contributor covered)	$123,000	$143,000
Married (spouse covered, you are not)	$230,000	$240,000

Strategy: How to Maximize All Available Space

Step 1: Capture the Employer Match First

If your employer offers a 401(k) match, contribute at least enough to get the full match before doing anything else. This is free money — a 100% immediate return on your contribution. No other investment gives you that.

Step 2: Max the 401(k) if You Can

At $23,000/year, maxing your 401(k) requires saving $1,916.67/month. That’s aggressive but achievable for higher earners. The compound growth over decades is substantial — see the compound interest calculator to model how $23,000/year grows at various rates of return over 20–30 years.

Step 3: Fund an IRA

After the 401(k), consider a Roth IRA (if eligible) or traditional IRA for additional tax-advantaged space. Roth accounts grow tax-free, and qualified withdrawals in retirement are not taxed. For long-term savers who expect to be in a higher bracket in retirement, Roth is often the better choice.

Step 4: Return to the 401(k) if You Want More

Some 401(k) plans allow after-tax contributions beyond the $23,000 employee limit, up to the $69,000 combined limit. If your plan allows this and you’re an advanced saver, an after-tax mega-backdoor Roth conversion could be an option.

Workers 50+: The $30,500 Total

If you’re 50 or older by December 31, 2024, you can contribute up to $30,500 to your 401(k) — $23,000 in regular contributions plus $7,500 in catch-up contributions. This is one of the most valuable features of the retirement savings system for late starters or those who want to accelerate in their peak earning years.

Age	401(k) Max	IRA Max	Total
Under 50	$23,000	$7,000	$30,000
50 and older	$30,500	$8,000	$38,500

Self-Employed: SEP-IRA and Solo 401(k)

If you’re self-employed, the limits are even more generous. The SEP-IRA limit rises to $69,000 for 2024 (or 25% of compensation, whichever is less). A Solo 401(k) allows you to contribute both as the “employee” ($23,000, or $30,500 with catch-up) and the “employer” (up to 25% of net self-employment income), potentially reaching the $69,000 combined limit.

Tax Impact at a Glance

Marginal Rate	$500 More in 401(k) Saves You
12%	$60/year
22%	$110/year
24%	$120/year
32%	$160/year
37%	$185/year

The higher your bracket, the more valuable each dollar of pre-tax contribution becomes.

Key Takeaways

• The 2024 401(k) limit rises to $23,000 (up $500); catch-up remains $7,500
• Workers 50+ can contribute up to $30,500 total in 2024
• The IRA limit increases to $7,000 (up $500); $8,000 with catch-up
• Traditional 401(k) contributions reduce taxable income and tax withholding immediately
• The combined employee + employer 401(k) limit is $69,000
• Maxing both a 401(k) and an IRA in 2024 shelters up to $30,000 (under 50)