In the United States, both spouses can contribute to their respective 401(k) retirement accounts. Each spouse can contribute up to the annual limit set by the Internal Revenue Service (IRS). This allows couples to maximize their tax-deferred savings. However, it’s important to note that the contribution limits are per person, not per household. So, even if one spouse is not working, the other spouse can still contribute the full amount to their 401(k).
## Contribution Limits for Spouses
If both spouses are eligible to contribute to a 401(k) plan, they can each contribute up to the annual limit set by the IRS. For 2023, the limit is $22,500. If the employee is age 50 or older by the end of the calendar year, they can make an additional catch-up contribution of $7,500, for a total limit of $30,000.
- Employee Contributions: Each spouse can contribute up to $22,500 to their own 401(k) plan.
- Employer Contributions: Employers can also make matching contributions to their employees’ 401(k) plans. The maximum employer contribution for 2023 is $66,000 (up from $61,000 in 2022), including employee elective deferrals. However, this limit applies to both spouses combined, so the combined employer contribution cannot exceed $66,000.
- Catch-up Contributions: If either spouse is age 50 or older by the end of the calendar year, they can make an additional catch-up contribution of $7,500 to their own 401(k) plan.
| Contribution Type | Employee Under Age 50 | Employee Age 50 or Older |
|---|---|---|
| Employee Contribution | $22,500 | $30,000 ($22,500 + $7,500) |
| Employer Contribution (incl. employee deferrals) | $66,000 | $66,000 |
Joint Income Eligibility
Both spouses are eligible to contribute to a 401(k) plan, regardless of whether they are employed by the same employer. Each spouse’s contribution limit is based on their individual income. For 2023, the employee contribution limit is $22,500 ($30,000 for those age 50 or older).
To determine if both spouses are eligible to max out their 401(k) plans, consider the following joint income thresholds:
- Both spouses employed: If both spouses are employed and have earned income, they can each contribute up to the annual limit, regardless of their combined income.
- One spouse employed, other spouse non-working: If one spouse is employed and has earned income, they can contribute up to the annual limit. The non-working spouse is not eligible to contribute to a 401(k) plan.
- One spouse employed, other spouse has part-time income: If one spouse is employed and has earned income, they can contribute up to the annual limit. The spouse with part-time income can contribute to a 401(k) plan if their employer offers one, but their contribution limit is based on their own earned income.
To illustrate the contribution limits, consider the following table:
| Scenario | Spouse 1 Contribution | Spouse 2 Contribution |
|---|---|---|
| Both employed, earning $100,000 each | $22,500 | $22,500 |
| Spouse 1 employed, earning $150,000; Spouse 2 non-working | $22,500 | $0 |
| Spouse 1 employed, earning $100,000; Spouse 2 part-time, earning $25,000 | $22,500 | $6,250 |
Employer Plan Participation
Both spouses can contribute to their employer-sponsored 401(k) plans, up to the annual limit set by the IRS (for 2023, the limit is $22,500). However, there are a few important considerations:
- Eligibility: Both spouses must be eligible to participate in their employer’s 401(k) plan.
- Contribution Limits: Each spouse’s contribution is subject to the annual limit, regardless of whether they contribute to the same or different plans.
- Matching Contributions: Some employers offer matching contributions to 401(k) plans. If one spouse receives matching contributions, it reduces the amount that the other spouse can contribute.
| Year | Contribution Limit |
|---|---|
| 2023 | $22,500 |
| 2024 | $23,500 |
| 2025 | $24,500 |
Spouses Contributing to 401k Plans
In the United States, married couples can both contribute to their respective 401k retirement plans, provided they meet the eligibility requirements.
Contribution Limits
- For 2023, the annual contribution limit for 401k plans is $22,500.
- Individuals age 50 and older can make additional catch-up contributions of $7,500 in 2023.
Therefore, if both spouses are eligible and meet the age requirements, they can contribute a combined total of $57,000 to their 401k plans in 2023.
Catch-Up Contributions for Older Spouses
| Age | Contribution Limit |
|---|---|
| 50-59 | $22,500 + $7,500 |
| 60-64 | $22,500 + $7,500 |
| 65 or older | $22,500 |
For example, if one spouse is under age 50 and the other spouse is age 55, the couple can contribute a combined total of $52,500 to their 401k plans in 2023.
Note: These limits apply to both traditional and Roth 401k plans.
Conclusion
Maximizing 401k contributions is an excellent way for married couples to save for retirement. By taking advantage of catch-up contributions for older spouses, they can further increase their retirement savings.
Well there you go, my fine fiscals! Now you know the ins and outs of maximizing a power couple’s 401k magic. If you’ve got any more money-minding questions, feel free to pop back in. I’ll be here, brewing up some more financial knowledge just for you. Until next time, may your nests be ever so egg-cellent!