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Retirement Plan Contributions

November 3, 2023 | Article | 5 min | Business Insights

Understanding 401(k) contribution limits can be confusing even sometimes overwhelming. They are, however, essential to know. Below is a break down of important contribution limits that help employees determine whether their savings are on track or if there is an opportunity to catch up. The annual contribution limit is a great goal to keep in mind. It also encourages individuals who are able to defer additional funds into retirement savings to take advantage of doing so.

  2024 2023 2022
Employee Contribution Limit $23,000 $22,500 $20,500
Employee Catch-Up Contribution
(For employees aged 50 and over)
$7,500 $7,500 $6,500
Total Contribution Maximum for Defined Contribution Plan $69,000 $66,000 $61,000
Annual Compensation Limit $345,000 $330,000 $305,000
Individual IRA Annual IRA Contribution $7,000 $6,500 $6,000
Individual IRA Catch-Up Contribution $1,000 $1,000 $1,000
Annual Maximum Benefit Under Defined Benefit Plan $275,000 $265,000 $245,000
Highly-Compensated Employee $155,000 $150,000 $135,000
Social Security Wage Base $168,600 $160,200 $147,000
Simple IRA $16,000 $15,500 $14,000
Simple IRA Catch-Up $3,500 $3,500 $3,000

 

2024 IRS TAX SAVERS CREDIT1

Certain employees may be able to take a tax credit for making eligible contributions to the company’s retirement plan. An employee can generally take the credit if they are:

  • Age 18 or older;
  • Not a full-time student; and
  • Not claimed as a dependent on another person’s return.

More information about the Tax Savers Credit can be found in IRS Form 8880.

The amount of the credit is 50%, 20% or 10% of the employee’s retirement plan contributions up to $2,000 ($4,000 if married filing jointly), depending on their adjusted gross income that is reported on their Form 1040 or 1040A. The chart below shows the amount of the credit, depending on adjusted gross income and tax filing status.

How Much the Credit is Worth Married Filing Jointly Head of Household All Other
Tax-Filing Statuses
50% of your contribution AGI < $46,000 AGI < $34,500 AGI < $23,000
20% of your contribution $46,001 – $50,000 $34,501 – $37,500 $23,001 – $25,000
10% of your contribution $50,001 – $76,500 $37,501 – $57,375 $25,001 – $38,250
0% of your contribution more than $76,500 more than $57,375 more than $38,250

Questions? Email clientservices@htlfrps.com.

1For your specific situation, please consult with your tax advisor.
Products offered through HTLF Retirement Plan Services are not FDIC insured, are not bank-guaranteed, and may lose value, unless otherwise stated