2024 Roth and Traditional 401(k) & IRA Contribution Limits - Complete Guide
Last Updated: December 13, 2024
The IRS has announced increased retirement contribution limits for 2024, giving savers more opportunities to build their nest eggs. Here's everything you need to know about the new limits for both Roth and Traditional retirement accounts.
401(k) Contribution Limits for 2024
- Employee contribution limit: $23,000 (up from $22,500 in 2023)
- Catch-up contribution limit (age 50+): $7,500
- Total contribution limit (employee + employer): $69,000
- Total limit with catch-up contributions: $76,500
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IRA Contribution Limits for 2024
- Base contribution limit: $7,000 (up from $6,500 in 2023)
- Catch-up contribution limit (age 50+): $1,000
- Total limit with catch-up contributions: $8,000
Roth IRA Income Limits for 2024
Contribution eligibility phases out at these modified adjusted gross income (MAGI) ranges:
- Single filers: $146,000 - $161,000
- Married filing jointly: $230,000 - $240,000
- Married filing separately: $0 - $10,000
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Traditional IRA Deduction Limits for 2024
If you're covered by a retirement plan at work, deduction eligibility phases out at these MAGI ranges:
- Single filers: $77,000 - $87,000
- Married filing jointly: $123,000 - $143,000
- Married filing separately: $0 - $10,000
Strategic Considerations for 2024
- Consider maxing out both 401(k) and IRA contributions if possible
- Take advantage of catch-up contributions if you're 50 or older
- Review your income and contribution strategy if you're near the Roth IRA phase-out limits
- Consider backdoor Roth contributions if you exceed income limits
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Frequently Asked Questions
Should I choose a Roth or Traditional retirement account in 2024?
The choice depends on your current tax bracket and expected retirement tax bracket. Traditional accounts offer immediate tax deductions but require paying taxes on withdrawals. Roth accounts use after-tax money but provide tax-free withdrawals in retirement. Generally, choose Traditional if you expect to be in a lower tax bracket in retirement, and Roth if you expect to be in a higher bracket or want tax-free growth.
What happens if I contribute too much to my retirement accounts?
Excess contributions are subject to a 6% penalty tax for each year they remain in the account. You can avoid this by withdrawing the excess amount plus any earnings before your tax filing deadline (including extensions). For 401(k)s, your plan administrator should prevent over-contribution, but if it happens, request a return of excess contributions immediately.
How does the backdoor Roth IRA work in 2024?
The backdoor Roth allows high-income earners to fund a Roth IRA by first contributing to a Traditional IRA (no income limits) and then converting it to a Roth. However, beware of the pro-rata rule: if you have other Traditional IRA balances, you'll owe taxes on a portion of the conversion based on the ratio of pre-tax to after-tax money across all your IRAs.
Can I contribute to both a 401(k) and an IRA?
Yes, you can contribute to both simultaneously up to their respective limits. However, if you're covered by a workplace retirement plan, your Traditional IRA deduction may be limited based on your income. Roth IRA contributions are also subject to income limits, regardless of workplace plan coverage. The key is understanding how these limits interact with your specific situation.
What are the rules for catch-up contributions in 2024?
If you're 50 or older by December 31, 2024, you can make additional catch-up contributions: $7,500 for 401(k)s and $1,000 for IRAs. These are on top of the standard contribution limits. For 401(k)s, your plan must specifically allow catch-up contributions. There's no income limit on catch-up contributions, making them valuable for high-income earners maxing out their retirement savings.