Retirement Plan Contribution Limits for 2024

Published on February 26, 2024

All retirement and certain savings plans have annual contribution limits, whether they are employer-sponsored or owned by the individual. The type of retirement plan you have will determine how much you may contribute to it every year. These limits are set by the IRS. In 2024, those annual contribution limits increase slightly over last year’s amounts, for workplace retirement plans, regular and self-directed IRAs, health savings accounts (HSAs), and education savings accounts (ESAs).

IRAs: Traditional, Roth

Traditional and Roth IRAs: In 2024, individuals can contribute up to $7000 to their Traditional IRA or Roth IRA and those age 50 and older can add an additional $1000 catch-up contribution ($8000 total). If the taxpayer owns both types of IRAs, that total amount is aggregated across both. So, if you are younger than 50 and plan to contribute $5000 to your Traditional IRA, that leaves $2000 to put into your Roth.

Traditional IRA notes:
• The ability to deduct your contributions to your Traditional IRA depends on your income and whether you or your spouse also participate in workplace retirement plans.
• Funds in a Traditional IRA grow tax-free and the distributions are taxed as ordinary income.

Roth contribution notes:
• Contributions are made on a pre-tax basis and distributions are tax-free, as long as the account has been open and funded for at least five (5) years and you are over 59 ½ years old.
• The ability to contribute to a Roth IRA is based on the household’s modified adjusted gross income (singles or married filing jointly or separately). The good news is, the phaseout range has increased for 2024, enabling more people to qualify for Roth contributions.
• If you have a Roth IRA or plan to open one, consult your tax advisor about what you may or may not be able to contribute based on that income figure.

Workplace IRAs: SEP and SIMPLE

These plans for small-business owners or the self-employed have much more generous annual contribution limits.

SEP IRAs: In 2024, the limit for Simplified Employer Plans is no more than 25% of annual compensation, up to $69,000. If other employees at the business participate in the SEP, the contributions (made by the employer) must be equal for all eligible employees (including the owner).

SIMPLE IRAs: The Savings Incentive Match Plan For Employees combines features of a Traditional IRA and a 401(k) plan (with elective salary deferrals and mandatory employer contributions). In 2024, employees can contribute up to $16,000 to a SIMPLE IRA and those 50 or older get the catch-up contribution feature—which in a SIMPLE IRA is $3500.

Qualified retirement plans: 401(k), 403(b), profit sharing plans
These are employer-sponsored retirement plans, either defined contribution or defined benefit.
The increased contribution limit (what employees may defer) for 2024 is up only $500 from last year, to $23,000. The catch-up contribution amount for participants ages 50+ remains the same as last year at $7500. These figures apply to many 457 plans as well.

Solo(k) plans
Self-employed individuals/solopreneurs (without any common law employees) who have an EIN may open and fund a solo(k) plan. You may include partners and spouses in the plan. In 2024, the total contribution limit is $69,000 with a $7500 catch-up contribution for those 50 or older. Since the business owner is both employer and employee in a solo(k), that limit (before the catch-up contribution if relevant) can be arrived at with contributions from both sides of that equation:

• As the employee, up to $23,000 or 100% of your compensation, whichever is less
• As the employer, an additional profit-sharing contribution of up to 25% of your compensation or net self-employment income

Be sure to consult with your trusted advisor to make sure, if you have a solo(k) plan, that you are contributing amounts within IRS guidelines and that makes sense for your retirement savings goals and the business’s financials.

HSAs and ESAs

Health savings accounts have slightly higher contribution limits in 2024 (about 7% higher than last year). For individuals, the limit is $4,150 and for families it is $8,300. These accounts have an older age threshold for the catch-up contribution at 55+ and the contribution limit remains at $1000.

Education savings accounts (Coverdell ESAs) remain at $2000 per beneficiary, regardless of how many ESAs are open for the individual.

Self-direct your plans … and build retirement savings beyond contribution limits
All IRAs, solo(k) plans, and HSAs and ESAs can be self-directed. That means taxpayers can open and fund a self-directed account and invest the funds in a broad array of alternative assets to build diversity into their retirement savings goals. The tax advantages and contribution limits for each of these plans are the same as their “regular” counterparts. However, savvy investors have the potential for growing those retirement or other savings through nontraditional investments rather than relying solely on the stock market.

At Next Generation, we serve as the administrator and custodian for all these types of retirement and specialized savings plans. You can open and fund a self-directed IRA (Traditional, Roth, SEP, SIMPLE), a solo(k) plan, a health savings account or an education savings account with our convenient starter kits. If you have questions about opening or funding any of these accounts, or about the types of alternative assets allowed through self-direction, contact Next Generation at NewAccounts@NextGenerationTrust.com or 888.857.8058.