After-Tax Contribution Example

Sara, a higher wage earner, is age 38 and wants to make the maximum contribution to her 401(k)-type plan for the year 2024, including after-tax contributions with which she plans to execute a mega-back door Roth conversion.

Keep in mind that some companies put their own dollar limit on after-tax contributions, and many don’t even have an after-tax contribution option much less help facilitate a mega-back door Roth conversion. Read your company’s 401(k)-type plan literature to be sure.

Sara’s company offers a generous match of 50% of employee contributions and no set limit on after-tax contributions. How much can she contribute to her 401(k)-type plan using the maximums for the tax year 2024?

Maximum 401(k) Contribution for 2024

Since Sara’s employer had no set limit on after-tax contributions, it was computed by subtracting her regular contributions and company match from the 2024 maximum of $69,000 (69,000-23,000-11,500=34,500).

Employees of Sara’s company age 50 or older can save even more tax-advantaged money. They enjoy an extra $7,500 catch-up contribution along with a higher $76,500 limit on contributions:

Maximum 401(k) Contribution for 2024 (age 50 and over)

Those high contribution limits might seem like more than enough per year, especially if you’re on the younger side and dedicating parts of your most important money to financial goals other than retirement. On the other hand, if you’re striving to become financially independent, want to retire early, or you’re approaching retirement and are a little behind, those high maximums can be a godsend.