2024 Retirement and Benefit Plan Limit Increases: 401k, 403b, IRA, HSA, DCFSA

The beginning of the year is also a good time to check on the new annual contribution limits for retirement and benefit accounts, many of which are indexed to inflation. Our respective incomes have been quite variable these last few years, so I regularly adjust our paycheck deferral percentages based on expected income for the year. I still try to max things out if I can, or at least stay on pace to do so. This 2024 SHRM article and this 2024 IRS article have a nice summary of 2024 vs. 2023 numbers for most employer-based retirement and benefit accounts.

401k/403b Employer-Sponsored Accounts.

For example, you could break down your applicable limit down into monthly and bi-weekly amounts:

• $23,000 annual limit = $1,916.67 per monthly paycheck.
• $23,000 annual limit = $884.61 per bi-weekly paycheck.

The higher maximum limits are useful are for those folks that have the ability to contribute extra money into their 401k accounts on an after-tax basis (and then potentially perform an in-service Roth rollover), or those self-employed persons with SEP IRAs or Self-Employed 401k plans.

If you are contributing to a pre-tax account instead of a Roth, you could also use a paycheck calculator to find the detailed impact to your after-tax “take home” pay.

Even if you aren’t hitting the limits, consider increasing your salary deferral contribution rate 1% higher than last year. This can still make a substantial difference if you keep it up.

Traditional/Roth IRAs. The annual contribution limits are up $500 from last year, now $7,000 with an additional $1,000 allowed for those age 50+.

• $7,000 annual limit = $583.33 per monthly paycheck.
• $7,000 annual limit = $269.23 per bi-weekly paycheck.

Most brokerage accounts (Vanguard, Fidelity, M1 Finance) will allow you to set up automatic investments on a weekly, biweekly, or monthly basis. As long as you have enough money in your linked checking account, the broker will transfer the cash over and then invest it on a recurring basis. You may even be able to sync it to take out money the very same or next business day as when your paycheck hits (for example, every other Monday after your paycheck hits every other Friday).

Health Savings Accounts are often treated as the equivalent of a “Healthcare IRA” due the potential triple tax benefits (tax-deduction on contributions, tax-deferred growth for decades, and tax-free withdrawals towards qualified healthcare expenses). This assumes that you have a high-deductible health insurance plan (more popular every year as they are cheaper for employers too), you can cover your current healthcare expenses out-of-pocket, and you can still afford to contribute to the HSA. Up a little for 2024.

Healthcare Flexible Spending Accounts are still an commonly-available option for others. Up a little for 2024.

Dependent Care FSAs are easy tax savings if you have children in daycare and/or preschool. These are not indexed to inflation. They can also be used to pay for before and afterschool supervision and summer day camps.