Investment Plan Contribution Limits and Deadlines for the 2024 Tax Year

September 22nd, 2024

Saving for retirement and other long-term financial goals is a cornerstone of financial well-being. But you have to do it within certain constraints.

The U.S. government allows for a variety of tax-advantaged investment plans that encourage individuals to save. Most of these plans are sponsored by an employer, but a few are held by individuals. Each of those plans has its own set of unique contribution limits and deadlines.

The following is a break down of 2024’s contribution limits, contribution deadlines and required minimum distribution (RMD) deadlines for a swath of plans, including 401(k)s, solo 401(k)s, 403(b)s, 457(b)s, SEP IRAs, SIMPLE IRAs, IRAs, Roth IRAs and HSAs.

Note: The amount of compensation that can be taken into account when determining employer and employee contributions in employer-sponsored retirement plans is capped at $345,000 in 2024. Contribution limits, contribution deadlines and RMD deadlines listed below may have exceptions. You’ll want to consult with a tax specialist with questions.

401(k)s

A 401(k) plan is one of the most common retirement accounts offered by employers. This account allows employees to save and invest a portion of their paycheck before taxes are taken out, and that money grows tax-free while within the account.

2024 Contribution Limits

Employee contributions: $23,000.
Catch-up contributions: If you are age 50 or older, you can contribute an additional $7,500, bringing the total contribution limit to $30,500.
Employer contributions: Employers can also contribute to an employee’s 401(k). In total, the combined employee and employer contribution cannot exceed the lesser of $69,000 (or $76,500 for those over 50) or 100% of the participant’s compensation.

Important Dates in 2024

Contribution deadline: For employees, Dec. 31, 2024. For employers, the business’s tax-filing deadline, including extensions.
RMDs: If you’re 73 or older, you must take RMDs by Dec. 31 of each year. However, if this is your first year of taking RMDs, you can delay taking your first RMD until April 1, 2025. (But you would still have to take your second RMD by Dec. 31, 2025.)

Solo 401(k)s

A solo 401(k) is designed for self-employed individuals or business owners with no employees (other than a spouse). It offers the same tax advantages as a traditional 401(k) but with higher contribution limits, as the individual plays the role of both employer and employee.

2024 Contribution Limits

Employee contributions: 100% of compensation, up to the annual contribution limit of $23,000.
Catch-up contributions: If you are 50 or older, you can contribute an additional $7,500, for a total of $30,500.
Employer contributions: As the employer, you can contribute up to 25% of your compensation, with a total combined limit (employee and employer) of $69,000 (or $76,500 for those over 50).

Important Dates in 2024

Contribution deadline: For employees, Dec. 31, 2024. For employers, the business’s tax-filing deadline, including extensions.
RMDs: If you’re 73 or older, you must take RMDs by Dec. 31 of each year. However, if this is your first year of taking RMDs, you can delay taking your first RMD until April 1, 2025. (But you would still have to take your second RMD by Dec. 31, 2025.)

403(b)s

A 403(b) plan is similar to a 401(k) but is offered to employees of public schools, nonprofits and certain religious organizations. Like a 401(k), it allows for tax-deferred retirement savings.

2024 Contribution Limits

Employee contributions: $23,000.
Catch-up contributions: Employees age 50 or older can contribute an additional $7,500, for a total of $30,500.
Employer contributions: Employers can also contribute to an employee’s 403(b). In total, the combined employee and employer contribution cannot exceed the lesser of $69,000 (or $76,500 for those over 50) or 100% of the participant’s compensation.

Important Dates in 2024

Contribution deadline: For employees, Dec. 31, 2024. For employers, the business’s tax-filing deadline, including extensions.
RMDs: If you’re 73 or older, you must take RMDs by Dec. 31 of each year. However, if this is your first year of taking RMDs, you can delay taking your first RMD until April 1, 2025. (But you would still have to take your second RMD by Dec. 31, 2025.)

457(b)s

A 457(b) plan is a tax-advantaged, employer-sponsored retirement plan for employees of state and local governments, as well as some nonprofit organizations.

2024 Contribution Limits

Employee contributions: $23,000.
Catch-up contributions: Those age 50 and older can contribute an additional $7,500, for a total of $30,500.
Special catch-up provision: Some 457(b) plans allow employees to make contributions beyond the standard limits for the three years prior to retirement. Under this provision, participants can contribute up to twice the annual limit, which is $46,000 in 2024.
Employer contributions: Employers can also contribute to an employee’s 457(b), but it is uncommon. The combined employee and employer contribution cannot exceed the lesser of $23,000 (or $30,500 or $46,000 for those making catch-up or special catch-up contributions, respectively) or 100% of the participant’s includable compensation.

Important Dates in 2024

Contribution deadline: Dec. 31, 2024.
RMDs: If you’re 73 or older, you must take RMDs by Dec. 31 of each year. However, if this is your first year of taking RMDs, you can delay taking your first RMD until April 1, 2025. (But you would still have to take your second RMD by Dec. 31, 2025.)

SEP IRAs

A Simplified Employee Pension (SEP) IRA is a retirement account designed for self-employed individuals and small business owners. Only employers contribute to SEP IRAs on behalf of employees, making it a flexible option for business owners.

2024 Contribution Limits

Employee contributions: Employees cannot contribute to a SEP IRA.
Catch-up contributions: Employees cannot contribute to a SEP IRA, thus, there are no catch-up contributions.
Employer contributions: Employers can contribute up to 25% of an employee’s compensation or $69,000, whichever is less.

Important Dates in 2024

Contribution deadline: Employers can make contributions to SEP IRAs until their tax filing deadline, including extensions. For most businesses, the initial deadline is April 15, 2025, but this can be extended to Oct. 15, 2025.
RMDs: If you’re 73 or older, you must take RMDs by Dec. 31 of each year. However, if this is your first year of taking RMDs, you can delay taking your first RMD until April 1, 2025. (But you would still have to take your second RMD by Dec. 31, 2025.)

SIMPLE IRAs

The Savings Incentive Match Plan for Employees (SIMPLE) IRA is another plan for small businesses, allowing both employers and employees to contribute. SIMPLE IRAs are easier to set up and manage than 401(k)s, making them a popular choice for small businesses.

SIMPLE IRAs work a little bit differently than most other workplace plans.

2024 Contribution Limits

Employee contributions: $16,000.
Catch-up contributions: If you are 50 or older, you can contribute an additional $3,500, bringing the total to $19,500.
Employer contributions: Employers must either a.) match employee contributions up to 3% of compensation or b.) make a flat 2% contribution for all eligible employees, regardless of whether they contribute.

Important Dates in 2024

Contribution deadline: For employees, Dec. 31, 2024. For employers, the business’s tax-filing deadline, including extensions.
RMDs: If you’re 73 or older, you must take RMDs by Dec. 31 of each year. However, if this is your first year of taking RMDs, you can delay taking your first RMD until April 1, 2025. (But you would still have to take your second RMD by Dec. 31, 2025.)

Traditional and Roth IRAs

Traditional individual retirement accounts (IRAs) and Roth IRAs are both non-workplace plans. And both allow individuals to save for retirement outside of employer-sponsored plans, and both allow funds in the account to grow tax-free.

However, they each have a different additional tax benefit. Specifically, traditional IRAs are funded with pretax dollars while withdrawals in retirement are taxed as ordinary income, whereas Roth IRAs are funded with after-tax dollars while withdrawals in retirement are generally tax-free.

2024 Contribution Limits

Contributions: $7,000 (across all accounts, not per account)
Catch-up contributions: If you are age 50 or older, you can contribute an additional $1,000, for a total of $8,000.

Important Dates in 2024

Contribution deadline: Contributions for 2024 must be made by April 15, 2025.
RMDs: For traditional IRA account owners, if you’re 73 or older, you must take RMDs by Dec. 31 of each year. However, if this is your first year of taking RMDs, you can delay taking your first RMD until April 1, 2025. (But you would still have to take your second RMD by Dec. 31, 2025.) Roth IRA account owners are not subject to RMDs*, though beneficiaries may be.

HSAs

While not a retirement account, health savings accounts (HSAs) offer a triple tax advantage — contributions are tax-deductible, grow tax-free and can be withdrawn tax-free for qualified medical expenses — making them an excellent long-term savings tool. Better still? After age 65, funds can also be used for non-medical expenses without penalty (though ordinary income taxes apply).

2024 Contribution Limits

Individuals with self-only coverage: $4,150
Those with family coverage: $8,300
Catch-up contributions: From age 55 to 65, or the year in which you enroll in Medicare (if earlier than 65), you can contribute an additional $1,000, for a total of $5,150 or $9,300.

Important Dates in 2024

Contribution deadline: HSA contributions for 2024 can be made until April 15, 2025.
RMDs: HSAs do not have RMDs.

Everything You Need to Know About Retirement Plans

Understanding the contribution limits and key dates for various U.S. investment plans is critical for any employee who wants to plan out and optimize their savings — not to mention business owners who want to remain compliant with business and tax laws.

Want to know more? McManamon & Co. provides a wide range of custom services to small and midsize businesses, and our business consulting experts can help explain the ins and outs of any workplace retirement plan — not just limits and deadlines for each year, but the advantages each plan provides and how to begin implementing them.

Want to learn more? Give us a call at 440.892.8900 or contact us online.

Tags: investing, McManamon, McManamon & Co., retirement planning | Posted in McManamon & Co., Retirement Planning, taxes