2024 Annual Contribution Limits

There are many ways to save for retirement every year, but you cannot contribute an unlimited amount. The IRS sets limits to these amounts and has released updated contribution limits for 2024. Here is a summary of this year’s limits.

401(k) Contributions

The employer sponsored 401(k) plan is one of the best ways to save for retirement because of the potential tax advantages, the high contribution limits, and the possibility for employer contributions.

The 2024 annual maximum contribution limit for participants is $23,000 (up from $22,500 in 2023), and the catch-up contribution limit remains $7,500.

  • If you are maxing out plan contributions, double check your deferral percentage or fixed dollar amount. You may need to update the amount to continue to max out.
  • If you turn 50 in 2024, you are now eligible to make catch-up contributions. If you max out your plan contributions, consider also contributing the maximum catch-up amount.
  • If you don’t max out your plan contributions, consider increasing your deferral percentage. Many financial planners recommend saving at least 10-15% of your pre-tax income annually, which includes any employer match. Even increasing your deferral percentage by 1% each year can make a big difference long term.
  • If your employer offers a match, make sure you are at least contributing enough to receive the full match.

IRA/Roth IRA Contributions

IRAs and Roth IRAs offer an additional opportunity to save for retirement.

The limit for 2024 is the lessor of $7,000 or 100% of earned income (up from $6,500 in 2023). The catch-up contribution limit remains $1,000 for those who have attained age 50. This limit is the combined maximum you can contribute annually across all personal IRAs.

  • If you didn’t make the maximum contribution to your IRA last year, you are still able to make contributions for 2023 until April 15, 2024.
  • Non-working spouses may fund accounts based on their spouse’s earned income.
  • If you are covered by a workplace plan and your income exceeds $77,000 (single) or $123,000 (married, filing jointly) in 2024, your ability to deduct traditional IRA contributions phases out. However, even if you cannot deduct any of your traditional IRA contributions, the money you invest in a traditional IRA can grow tax-deferred until you withdraw it, and you will not have to pay income taxes on any contributions you previously did not deduct from your taxes.
  • To be eligible to contribute the maximum amount to a Roth IRA in 2024, your income must be less than $146,000 (single) or $230,000 (married, filing jointly). The contribution limit begins to phase out at these amounts and is capped at $161,000 (single) and $240,000 (married, filing jointly).
  • If you are over the Roth IRA contribution limits, you can still fund a Roth IRA using a technique called the “back door Roth.” This involves making a non-deductible traditional IRA contribution and immediately converting it to a Roth.
  • Keep in mind that you are allowed to fund an IRA if you are also contributing to a workplace retirement plan.
  • New in 2024, funds from a 529 plan can be rolled over into a Roth IRA for the beneficiary after 15 years. This is subject to the annual Roth contribution limits, and an aggregate lifetime limit of $35,000.

Other Financial Planning Items to Consider in 2024:

HSA Contributions

Health savings accounts (HSAs) let you save and pay for qualified medical expenses with tax-free dollars if you are eligible. To contribute to an HSA, you must be enrolled in an HSA-eligible high-deductible health plan and meet some additional criteria. The HSA contribution limits for 2024 are $4,150 for self-only coverage and $8,300 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution. The annual limit includes contributions made by your employer.

Qualified Charitable Distributions (QCDs)

A QCD is a direct transfer of funds from your IRA, payable directly to a qualified charity. If done correctly, the distribution amount is then excluded from your taxable income. This may be a great way to lower your taxable income if needed. You must be at least 70 ½ years old at the time you request a QCD, and if you are over 73, the amount of the QCD also counts toward satisfying your required minimum distribution (RMD). The maximum annual distribution amount that can qualify for a QCD in 2024 is $105,000. Be aware that certain charities are not eligible to receive QCDs, such as donor-advised funds and private foundations.

Estate and Gift Tax

The federal estate tax exemption for 2024 is $13,610,000 (up from $12,920,000 in 2023), and $27,220,00 for a married couple. The annual gift tax exclusion for 2024 is $18,000 per recipient (up from $17,000 in 2023). This is the amount each person can gift an individual this year without having to report it to the IRS on a gift tax return.

Estate Planning

Review your estate plan to make sure it still represents your wishes. If you do not have an estate plan in place, consider making it a priority for this year. An estate plan ensures that your assets are distributed according to your wishes.

Emergency Savings

Check your emergency fund. Especially in an uncertain economy, an emergency fund can help keep you financially afloat in unforeseen circumstances. A general rule of thumb is saving three to six months’ worth of living expenses in a safe liquid account.

If you’d like help reviewing your situation, Waukesha State Bank Wealth Management is here to help. Please contact 262-522-7400 or wealthmanagement@waukeshabank.com to get started.


Not FDIC insured, not guaranteed by the bank, not a deposit, may go down in value, not insured by any federal government agency