New updates to the 2023 and 2024 401k contribution limits. Use a free paycheck calculator to gain insights to your 401k and financial future.
The 401(k) contribution limit is the maximum amount an individual can contribute to their 401(k) retirement account in a calendar year without facing tax penalties. Set by the Internal Revenue Service (IRS), this limit undergoes periodic adjustments to account for inflation and changes in the cost of living.
For 2023, IRS set the 401(k) contribution limit to $22,500, reflecting an increase of $1,000 from 2022. This adjustment provides individuals with an opportunity to save more for their retirement, aligning with the escalating costs of living.
People aged 50 and older can make catch-up contributions to their 401k accounts. The catch-up contribution limit remains at $7,500 for 2023, allowing eligible individuals to contribute a total of $30,000, combining the standard and catch-up contribution limits.
For 2024, the contribution limit increases again to $23,000. The IRA catch‑up contribution limit for individuals aged 50 and older remains at $7,500 for 2024.
Going over the 401(k) contribution limit can lead to costly penalties. You might have to pay a 10% penalty on the excess contributions. Talk to your employer or HR department if you need help correcting your 401k contributions.
To help you make informed decisions about your contributions, use a free 401k calculator to estimate your take-home pay after deductions, including 401k contributions and optimize your paycheck for maximum retirement savings. You can also use our salary, hourly, and net-to-gross calculators to better understand how your paycheck is taxed. Happy calculating!
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