401(k) Plan Limits: Who Qualifies and What You Get
Understand the contribution limits and rules for 401(k) retirement plans to help manage your long-term savings and tax strategy.
A 401(k) plan is a retirement savings program that offers tax advantages to help you build wealth for the future.
Who it's for
This scheme is for employees and employers who are participating in a retirement plan.
What you get
You get the ability to save for retirement with specific tax advantages. For the 2024 period, you can contribute up to $23,000 into the plan.
What it costs you
While the savings are a benefit, you may have to pay plan administration fees to manage the account.
The catch to know
If you are considered a highly compensated employee (HCE), you are subject to non-discrimination testing. This is a process used to ensure that retirement plan benefits are distributed fairly among all employees, not just those with higher salaries.
How to apply
- Check with your employer to see if they offer a retirement plan.
- Determine how much of your paycheck you want to contribute.
- Set up your contribution through your company's benefits administrator.
- Monitor your annual totals to ensure you stay within the legal limits.