Around this time each year, we like to provide some year-end tax planning advice for those who are actively saving for retirement … which we hope includes just about every reader, regardless of their age.

Let’s jump in!

The Tea

This is the time of year to review the contributions made to your retirement accounts thus far to see if you're on track to meet your 2024 retirement savings goals.

The two most popular types of retirement accounts are employer-sponsored 401(k) plans and individual retirement accounts (IRAs).

WealthUp Tip: IRAs and 401(k) plans differ in a variety of ways. Check out our comparison of these two types of retirement accounts.

Don't have a 401(k) plan at work? Maybe your employer offers a 403(b) or 457 plan instead. If you work for the federal government, there's the Thrift Savings Plan. These are all similar to a 401(k) plan.

If you're self-employed, own a small business, or work for a small business, perhaps your retirement savings are tucked in a solo 401(k), Simplified Employee Pension (SEP) IRA, or Savings Incentive Match Plan for Employees (SIMPLE) IRA.

You can even use a health savings account (HSA) to save for retirement.

But which type of retirement account you're using isn't the most important thing, as long as you're stuffing as much money as you can handle into one or more of them. That's because each account comes with its own blend of tax breaks that makes their use a no-brainer for anyone saving for retirement.

Immediate tax breaks are available for contributions to some of these accounts, and all of them offer either tax-free or tax-deferred growth (depending on whether it's a "traditional" or "Roth" account). There's even a special tax credit of up to $1,000 ($2,000 for married couples filing a joint tax return) for low- and moderate-income retirement savers.

So, what should you do near the end of each year to make sure you're taking full advantage of these retirement accounts and squirreling away enough money for your golden years?

The Take

Right now, you should be focusing on two things: the limits and the deadlines for making contributions to your retirement accounts for the 2024 tax year.

If you exceed an annual contribution limit, you'll be hit with an IRS penalty (assuming you don't rectify your mistake in time). If you miss the deadline, your contribution will be deemed a 2025 contribution, which means you're missing an opportunity to contribute this year and won't be able to put as much money into your retirement account next year.

So, to make sure you're making the most of your retirement dollars, let's go over the 2024 contribution limits and deadlines for all the retirements mentioned above.

401(k) and Similar Plans 

For 2024, the maximum amount employees under 50 years old can put in a 401(k) or similar account is $23,000.

Workers aged 50 and older can also put in an additional $7,500 in "catch-up" contributions (for a total of $30,500). A special rule for 457 plan participants within three years of their full retirement age increases the catch-up contribution limit to $22,500 (i.e., double the basic max).

You also can't contribute more than your compensation for the year. 

WealthUp Tip: Should you max out your 401(k) each year? Yes … and no.

These limits apply to all your 401(k) or similar accounts. So, for example, if you switched jobs this year and contribute to two separate accounts in 2024, the total amount can't exceed the $23,000 (or, with catch-ups, $30,500) cap.

In addition, if your employer offers a matching contribution, the combined total of employee and employer contributions to your account in 2024 can't exceed $69,000, or $76,500 for people making catch-up contributions (other than for 457 plans). 

(Want to know more? We have all the 401(k) limits for 2025, too)

If you haven't yet maxed out your 401(k) this year, you don't have much time left. You have until Dec. 31, 2024, to plunk more money in your 401(k) account for the 2024 tax year.

However, contributions to your 401(k) account are taken out of your paycheck and deposited into your account by your employer. You can't just send money to the 401(k) plan administrator on your own and have it deposited into your account (as you can with an IRA). If you're not sure how to have your 401(k) contribution increased, contact your employer's HR department or the plan administrator.

Traditional and Roth IRAs

The contribution limits are much lower for IRAs, and can even be reduced (potentially down to $0) for Roth IRA contributions if your income is too high.

For the 2024 tax year, the IRA contribution cap for people under age 50 is $7,000. If you’re at least 50 years old, you can top that off with an extra $1,000 catch-up contribution. (As with 401(k) plans, the annual limit is a combined limit that applies to all your IRAs.)

This year's annual contribution limit for Roth IRAs starts to phase out if your modified adjusted gross income is:

• $230,000 to $240,000 if your tax filing status is married filing jointly or surviving spouse
• $146,000 to $161,000 if your filing status is single, head of household, or married filing separately and you didn't live with your spouse at any time during the year
• $0 to $10,000 if your filing status is married filing separately and you lived with your spouse at any time during the year

(Want to know more? Check out all the 2024 IRA limits.)

WealthUp Tip: Make the most of your contributions with the 10 best investments for Roth IRAs.

If you're a procrastinator, the good news about IRAs is that most people actually have until April 15, 2025, to put money in an IRA for the 2024 tax year. (Deadlines are extended to May 1, 2025, for taxpayers located in seven states affected by Hurricane Helene.) But why wait? If you can swing it, the better option is to contribute to an IRA before the end of the year and start reaping the potential benefits of tax-deferred growth (traditional IRA) or tax-free growth (Roth IRA) right away.

Health Savings Accounts

HSAs are primarily used to offset medical costs now and in the future. However, once you turn 65, money in an HSA can be used for any purposes without penalty. As a result, many people use HSAs as a supplemental retirement savings account.

But, of course, there are annual contribution limits for HSAs, too. For 2024, the HSA contribution limits are:

• $4,150 if you have self-only coverage under a high-deductible health plan (HDHP)
• $8,300 if you have family coverage under an HDHP

If you're at least 55 years old at the end of the year, an additional $1,000 catch-up contribution is allowed. (You can find the 2025 caps here.)

WealthUp Tip: Want to open an HSA? We have a list of the best HSA providers.

As with IRAs, you have until the April 2025 tax deadline (May for Helene-hit states) to stash money in an HSA for the 2024 tax year. But, again, you're losing out on the potential for tax-free growth by putting it off until then.

Solo 401(k) Plans

You can open a solo 401(k) if you're self-employed or own a business with just one employee who is your spouse. (Solo 401(k) plans are sometimes called one-participant 401(k) plans, individual 401(k) plans, or uni-401(k) plans.)

Solo 401(k) plans are basically "regular" 401(k) plans, but as a self-employed person or small business owner you can make contributions as both an employer and an employee. As a result, you can contribute up to $23,000 to a solo 401(k) as an employee in 2024 if you're under age 50. Solo 401(k)s also have catch-up contributions—they’re 7,500 for 2024. So, if you’re age 50 or older, you can contribute up to $30,500.

You can also contribute up to 25% of your compensation as an employer in 2024, but the combined total of all 2024 contributions can't exceed $69,000, or $76,500 if you're at least 50 years old.

The deadline for contributing to a solo 401(k) is a bit different, though. You generally have until April 15, 2025 (May 1, 2025 for Helene-hit states), to fund a solo 401(k) for the 2024 tax year. However, if you request an extension to file your 2024 federal income tax return, you'll have until Oct. 15, 2025, to put money in a solo 401(k) account and have it count toward your 2024 limit.

SEP IRAs

Like solo 401(k) plans, SEP IRAs are available to small businesses owners and self-employed people. If you're self-employed, you simply contribute to your own SEP IRA. However, if you're a business owner with employees, you must also set up and contribute to a SEP IRA for each eligible employee. The employees can't contribute their own money to their account, though.

In all cases, contributions are based on a percentage of the account holder's compensation. The self-employed person or business owner sets the percentage each year. However, for business owners with employees, the contribution percentage must be the same for all eligible workers.

The annual contribution limit for SEP IRAs is fairly straightforward. For 2024, total contributions to a SEP IRA can't exceed $69,000 or 25% of the first $345,000 of compensation, whichever is lower. Catch-up contributions aren't allowed.

WealthUp Tip: Find out which SEP IRAs we think are the best.

The deadline for SEP IRA contributions is the same as the deadline for solo 401(k) deposits. For 2024 contributions, you have until April … or until October if you extend the filing due date for your 2024 return.

SIMPLE IRAs

A SIMPLE IRA is another option for self-employed people and small businesses owners (generally up to 100 employees) looking for a retirement savings vehicle. Unlike SEP IRAs, both employers and employees can contribute to a worker's SIMPLE IRA.

Employer contributions are actually required with SIMPLE IRAs. For 2024, an employer must contribute one of the following to each eligible employee's SIMPLE IRA account:

• A dollar-for-dollar match of the employee's contribution, up to 3% of the employee's compensation
• 2% of the first $345,000 of the employee's compensation

In addition, workers under 50 can contribute up to $16,000 to a SIMPLE IRA for the 2024 tax year. Catch-up contributions up to $3,500 (for a total of up to $19,500) are allowed for 2024 if you're 50 or older.

WealthUp Tip: Here's how to start a retirement plan and build retirement savings.

When contributions are due depends on the type of contribution. As with 401(k) plans, contributions for 2024 must be made by Dec. 31. Employee contributions are made through payroll deductions (again, like 401(k) contributions). So, if you want to increase your contribution amount, contact your employer to see how that's done.

Employers have more time to complete the mandatory contributions to their employees' SIMPLE IRA accounts. Those contributions are due by the deadline for filing the business's federal income tax return (including extensions) for the taxable year for which the contributions are made.

Now that you know the contribution limits and deadlines associated with the various retirement accounts, get out there and evaluate your current savings for the year. If you can, and haven't already maxed out your accounts, try to put at least a little more away for retirement this year. 

One day, you'll be glad you did!

Riley & Kyle

WealthUp

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This post first appeared on WealthUp.com and has appeared here with permission from WealthUp.