Contribution limits: 401(k), IRA, HSA, and 529 plans

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Know your limits (and maximize your savings).

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One of the more vexing aspects of tax-advantaged accounts is keeping track of contribution limits, catch-up contributions, and income thresholds. The Internal Revenue Service adjusts many of these limits periodically for inflation, which means the amount you’re allowed to save for retirement, education, or medical expenses can change from year to year.

Both 401(k) and 403(b) plans allow workers to save for retirement with pretax contributions. Contribution limits are adjusted periodically for inflation, and workers age 50 and older may qualify to make additional catch-up contributions. Under the SECURE 2.0 Act, workers ages 60 to 63 can make larger catch-up contributions.

Employees whose companies offer matching contributions may be able to save even more because employer contributions don’t count toward the employee contribution limit. Separate IRS limits apply to total employee and employer contributions.

All contributions to traditional 401(k) and 403(b) plans are tax deferred, which means you’ll generally owe ordinary income tax when you withdraw the money in retirement. Withdrawals before age 59½ may be subject to taxes and penalties.

Contribution limits for individual retirement accounts are lower than those for 401(k) plans, but IRAs offer additional flexibility and tax advantages.

The annual contribution limit applies to all of your IRAs combined. For example, if you have both a traditional IRA and a Roth IRA, the total amount you contribute can’t exceed the annual limit.

Contributions to traditional IRAs are generally tax deferred, which means you don’t pay taxes on the money until it’s withdrawn in retirement. You can generally contribute to a traditional IRA regardless of how much you make, but income limits may affect whether you can deduct your contributions on your tax return.

Contributions to Roth IRAs are made with after-tax dollars, and qualified withdrawals are tax free. Eligibility to contribute to Roth IRAs is subject to income limits based on your modified adjusted gross income (MAGI). As income rises, the amount you can contribute may be reduced or eliminated.

Even if your income is too high to contribute directly to a Roth IRA, you may still be able to move money from a traditional IRA to a Roth IRA using what’s known as a Roth conversion or backdoor Roth strategy. Roth conversions aren’t subject to annual contribution limits, but taxes may be due on the amount converted if the funds were contributed pretax.

A simplified employee pension (SEP) plan is a retirement account commonly used by small businesses and self-employed individuals. A SEP-IRA is relatively easy to set up, the costs are low, and depending on your income level, the contribution limit can be substantially higher than that of a traditional IRA.

Employers, not employees, contribute to SEP-IRAs. If you’re self-employed, you make contributions on your own behalf. The account is in your name, but the contribution amount is determined each year by the employer. Contributions are tax deductible and vest immediately.

Annual SEP-IRA contributions are generally limited to a percentage of compensation, subject to IRS maximums.

Health savings accounts help pay for health care costs. Withdrawals must be used for qualified medical expenses to remain tax (and penalty) free. HSAs offer some of the most favorable tax advantages available to savers.

To contribute to an HSA, you generally must be enrolled in an HSA-eligible health plan. Contribution limits depend on whether you have individual (“self-only”) or family coverage, and account holders age 55 and older may make an additional $1,000 catch-up contribution.

Unlike flexible spending accounts (FSAs), HSA funds roll over from year to year and remain available until they’re used.

HSAs provide a triple tax benefit:

If you use HSA funds for nonqualified expenses, you’ll owe taxes on the withdrawal and, if you’re younger than 65, a 20% penalty.

529 plans allow families to save for college tuition and other education expenses with tax-free growth and tax-free withdrawals.

Unlike retirement accounts and HSAs, 529 plans don’t have federal annual contribution limits. States establish their own aggregate contribution limits and account maximums.

Because 529 contributions count as gifts, they’re subject to federal gift-tax rules. Contributions above the annual exclusion amount generally require filing Form 709 with your tax return and count toward your lifetime gift-tax exemption.

The five-year election. A special five-year election allows contributors to front-load up to five years’ worth of gifts into a 529 plan. In 2026, individuals can contribute up to $95,000 at once ($190,000 for married couples) and elect to spread the gift-tax reporting over five years.

Contributions to 529 plans aren’t deductible at the federal level, although some states offer tax deductions or credits.

Planning for retirement, health care costs, and education expenses often involves balancing multiple savings goals. Tax-advantaged plans such as 401(k)s, 403(b)s, IRAs, HSAs, and 529 plans can help you save for those goals while reducing your tax burden.

Contribution and income limits vary by account type and may change from year to year. Understanding those limits can help you make the most of the savings opportunities available to you.