Guide to 401(k) Contribution Limits and Employer Match for 2024

When it comes to planning for retirement, 401(k) plans are a popular choice among Americans. These employer-sponsored, tax-advantaged accounts provide a fantastic opportunity to save for the future. However, it’s essential to understand the rules and limits, particularly regarding employer matches.

 401(k) Contribution Limits and Employer Match for 2024
401(k) Contribution Limits and Employer Match for 2024

401(k) Contribution Limits and Employer Match for 2024

The IRS has released the 401(k) contribution limits for the year 2024. These limits impact the amount you can contribute to your 401(k) and 403(b) accounts, along with important considerations for catch-up contributions if you’re 50 or older.

For individuals under 50 years old, the employee contribution limit for 401(k) and 403(b) accounts will increase to $23,000. This means you can contribute up to this amount from your own salary.

If you’re aged 50 or older, you become eligible for catch-up contributions. In 2024, the catch-up contribution limit is $7,500. This additional allowance is designed to help older individuals boost their retirement savings.

The total contribution limit, which includes both employee and employer contributions, is set at $68,000 for those under 50. This figure encompasses all contributions made to your 401(k) account.

For individuals aged 50 and older, the total contribution limit will rise to $75,500. This increase accounts for the higher catch-up contribution allowance, providing older workers with the opportunity to save more towards their retirement.

Exploring types of employer contributions to 401k

Employers can contribute to 401(k) plans in various ways. Here are some common types of employer contributions:

1. 401(k) match formula

Matching contributions are a popular choice among employers. They involve employers matching a portion of the employee’s contributions, usually up to a specific dollar amount or a percentage of the employee’s salary. For example, an employer might match 50% of an employee’s contribution up to 6% of their salary.

2. Non-Elective Contributions

Non-elective contributions are made by employers to employees’ accounts, regardless of whether the employee contributes to the plan or not. This provides an additional retirement benefit to employees.

3. Profit-Sharing Contributions

Employers might choose to make contributions based on the company’s profits. This type of contribution can fluctuate from year to year, depending on the company’s financial performance.

4. Safe Harbor Contributions

To avoid certain compliance tests, employers may make mandatory contributions to employees’ accounts. These contributions help ensure that the plan remains in compliance with IRS regulations.

5. Qualified Automatic Contribution Arrangements (QACAs)

Employers who use QACAs automatically enroll employees in the plan and make contributions on their behalf. This approach encourages more employees to participate in the 401(k) plan.

Frequently Asked Questions

1. Can I withdraw money from my 401(k) before retirement?

Yes, it is possible to withdraw money from your 401(k) account before retirement, but doing so may result in a penalty if you’re younger than 59½. Some exceptions apply, such as qualifying financial hardships, like medical expenses or purchasing a primary residence. However, it’s important to note that even if you qualify for an exception, you will still need to pay income tax on the amount you withdraw.

2. How do I change my 401(k) contribution amount?

You can adjust your 401(k) contribution amount in two ways: contact your employer’s HR department or log in to your online account. Here are the steps:

  1. Log In: If you have an online account, log in with your username and password. If not, contact HR for assistance.
  2. Find Contribution Settings: After logging in, look for “Contributions” or “Settings.”
  3. Set New Amount: Specify your new contribution amount, either as a percentage of your salary or a specific dollar figure.
  4. Save Changes: Save your adjustments. Note that there may be limits on how often you can make changes, and altering your pre-tax contributions could affect your take-home pay.

3. What is the 401(k) match formula?

The 401(k) match formula can differ from one company to another and is determined by the specific details of the employer’s plan. The most prevalent 401(k) match formula, as seen in Fidelity’s plans, is a dollar-for-dollar match on the first 3% of the employee’s contribution, followed by a 50 cents on the dollar match on the next 2%.

For instance, if an employee contributes 5% of their salary, they effectively receive an additional 4% contribution from their employer (3% + 1%, or half of 2% = 4%)

However, employers have the flexibility to select various methods for matching employee contributions. Typically, employers match a percentage of employee contributions up to a specific portion of the total salary. In some cases, employers may opt to match employee contributions up to a particular dollar amount, irrespective of the employee’s overall compensation.


401(k) plans offer an excellent opportunity for retirement savings, with the potential for employer contributions. Understanding the contribution limits and the types of employer matches is essential for making informed decisions about your retirement planning. Make sure to take full advantage of your employer’s contributions and explore your options to secure a comfortable retirement.

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