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Get More from Your Retirement Contributions

Get More from Your Retirement Contributions

April 04, 2024
How Much Are You Contributing to Your Retirement?

Max out your contribution limits.

Do you know what the contribution limits are for your specific type of retirement account? Knowing these limits will help you make the maximum contributions without exceeding those limits and get penalized for over contributing.

Making the maximum contribution allows you to save as much money in your retirement account before you get to retirement age. Adding as much money as you’re allowed will help you save for retirement now so you can retire sooner and contribute to a more stable retirement strategy.

Employer Sponsored Retirement Plans

In 2024, you can contribute $23,000 to your 401k, 403b or 457 plan. And the total contribution limit for you and your employer combined in 2024 is $69,000.

If you have both a traditional 401k and a Roth 401k, your total contributions can’t exceed the $23,000 limit.

But if you have a traditional 401k with another type of retirement account (like an IRA), the contributions you make to your secondary retirement account don’t count against your 401k limits.

IRA

If you have an IRA (whether Roth or traditional) your annual contribution limit is $7,000. For a spousal IRA, each half of the couple can contribute up to $7,000 as well.

Catch-Up Contributions

There are also catch-up contributions you can make if you’re over 50 years old. These limits allow you to contribute an additional $7,500 into your 401(k) to help you catch up from when you didn't make retirement payments. IRA catch-up contribution is $1,000. Sometimes there AREadvantages with aging. 

Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.