The 415 limit is named for section 415 of the Internal Revenue Code (IRC). It reflects the maximum allowable contributions to a qualified retirement savings plan in a given year.♈

Importantly, catch-up con🌱tributions are not included in the 415 limit.

Maximum employee contributions are dictated by section 402(g). Contributions from other sources are limited by section 415. This includes employee deferrals, employer matching, and profit-sharing contributions.

What Is the 415 Limit?

Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit imposed on catch-up contributions, it is designated by a different section of the 澳洲幸运5开奖号码历史查询:Internal Revenue Service (IRS) code governing contributions to qualified retiremen🍒t savings plans.

The 415 limit for 澳洲幸运5开奖号码历史查询:401(k) plans is $69,000 for 2024 and $70,000 for 2025. Of that, employees may contribute up to $23,000 in 2024 and $23,500 in 2025. The total can be composed of employee contributions and matching or 澳洲幸运5开奖号码历史查询:profit-sharing contributions.

Catch-Up Contributions

To encourage employees nearing retirement to increase their savings, the IRS allows people aged 50 and over to make annual catch-up contributions over the 402(g) and 415 limits. Because these contributions are defined separately in IRC code 414(v), they are not included as annual additions under section 415.

In the case of a plan audit, therefore, any contributions made to a plan as allowable catch-up contributions are not included in the 415 limit test.

Specific Catch-Up Amounts

The IRS allows plan participants 50 and over to make annual catch-up contributions to 401(k) plans for 2024 and 2025 of $7,500.

Starting in 2025, employees aged 60, 61, 62, and 63 are allowed a higher catch-up contribution of $11,250.

The 50 and over catch-up amount increases the maximum employee contribution to $30,500 in 2024 and $31,000 in 2025. In turn, this boosts the maximum total annual 💃contribution to $76,500 in 2024 and $77,500 in 2025.

Bear in mind that catch-up contributions can only be made by employees who have maximized their traditional salary-deferral contributions.

Going Over the 415 Limit

As noted above, there are limits to how much individuals can contribute to their retirement plans. These limits are set by the IRS and are adjusted annually for . Notably, there are consequences if individuals make contributions that exceed the limit.

Anything that is deposited above the 415 limit is considered overfunding of the retirement account. As such, these monies do not enjoy the same tax-deferred benefits as qualified retirement money. If those excess funds are used incorrectly, the IRS may further impose fines and back taxes.

Individuals can 澳洲幸运5开奖号码历史查询:fix an overfunding mistake by withdrawing the excess and/or forfeiting any matches made by their employer. It is the employer's responsibility to report any corrections to the IRS. Any amounts disbursed are included in the individual's taxable income. You may also face an early withdrawal penalty of 10%.

The Bottom Line

Catch-up contributions can help people 50 and over, and 60 and over (beginnin𝓰g in 2025) save additional money for their retirement. The IRS sets catch-up limits each year after the𒆙y are adjusted for inflation.

You can make an additional contribution of $7,500 in 2024 and 2025 to your 401(k), 403(b), or similar employer-sponso🔯red plan if you qualify. This is in addition to the annual employee contribution limits set for these plans of $23,000 in 2024 and $23,500 in 2025.

Although these extra contributions aren't included in the 415 limits, be mindful that you don't exceed your annual contribution amounts or you may face fines and penalties.