What is the maximum contribution to a defined contribution (DC) plan in 2024?

What is the maximum contribution to a defined contribution (DC) plan in 2024?

• A. $30,000
• B. $32,500
• C. $35,000
• D. $40,000

Answer: (B)

Defined contribution plan contributions for a year are limited to the lesser of 18% of compensation or a fixed dollar cap. For 2024, that fixed cap is $32,500. So the maximum amount that can be contributed to a DC plan in 2024, from both employee and employer combined, is $32,500, unless your earnings are such that 18% of compensation is smaller—then your limit would be that smaller amount. For example, earning $180,000 would yield 18% of $180,000 = $32,400, which is under the cap, so the limit would be $32,400. If earnings are $200,000, 18% would be $36,000, but you’re capped at $32,500. The numbers shown reflect the 2024 cap, so the correct figure is $32,500.

Defined contribution plan contributions for a year are limited to the lesser of 18% of compensation or a fixed dollar cap. For 2024, that fixed cap is $32,500. So the maximum amount that can be contributed to a DC plan in 2024, from both employee and employer combined, is $32,500, unless your earnings are such that 18% of compensation is smaller—then your limit would be that smaller amount. For example, earning $180,000 would yield 18% of $180,000 = $32,400, which is under the cap, so the limit would be $32,400. If earnings are $200,000, 18% would be $36,000, but you’re capped at $32,500. The numbers shown reflect the 2024 cap, so the correct figure is $32,500.