Understanding the maximum annual 401(k) contribution can help ensure you maximize your retirement savings. The maximum contribution limit is set by the federal government and adjusted periodically for inflation. For 2023, the contribution limit for employees who participate in 401(k) plans increased to $22,500, up from $20,500 in 2022. For individuals who are age 50 or older by the end of the calendar year, catch-up contributions are allowed, with an additional $7,500 contribution limit in 2023, up from $6,500 in 2022. These limits apply to both traditional and Roth 401(k) plans. Knowing the maximum annual contribution limit can help you plan your retirement savings effectively and take advantage of tax-advantaged saving opportunities.
Maximum Annual 401k Contribution
The maximum annual 401k contribution limit for 2023 is $22,500. Individuals who are 50 years or older by the end of the calendar year can make an additional catch-up contribution of $7,500. For 2024, the contribution limits are expected to increase to $23,000 and $8,000 for standard and catch-up contributions, respectively.
Employer Contribution Limits
- Traditional 401k: Employers are not limited in the amount they can contribute to an employee’s traditional 401k.
- Roth 401k: Employers are limited to the same annual contribution limits as employees. For 2023, the individual and employer contribution limit for Roth 401ks is $22,500. For 2024, it is expected to increase to $23,000.
Contribution Limits for 2023 and 2024
| 2023 | 2024 | |
|---|---|---|
| Employee Contribution Limit | $22,500 | $23,000 |
| Catch-Up Contribution Limit (age 50+) | $7,500 | $8,000 |
| Employer Contribution Limit (Traditional 401k) | No limit | No limit |
| Employer Contribution Limit (Roth 401k) | $22,500 | $23,000 |
Annual Contribution Limits
The maximum annual contribution limit for 401(k) plans is set by the Internal Revenue Service (IRS) and is adjusted periodically for inflation. For 2023, the annual contribution limit is:
- $22,500 for employees under age 50
- $30,000 for employees age 50 or older (catch-up contributions)
In addition to the employee contribution limit, employers may also make matching contributions to their employees’ 401(k) plans. The maximum employer matching contribution for 2023 is $66,000 ($73,500 including catch-up contributions for employees age 50 or older).
The following table summarizes the annual contribution limits for 401(k) plans:
| Under Age 50 | Age 50 or Older | |
|---|---|---|
| Employee Contribution Limit | $22,500 | $30,000 |
| Employer Matching Contribution Limit | $66,000 | $73,500 |
The Maximum Annual 401(k) Contribution
The annual contribution limit for 401(k) plans is set by the IRS and is adjusted each year to keep up with inflation. For 2023, the maximum contribution limit is $22,500 ($30,000 for those age 50 or older who are eligible for catch-up contributions).
In addition to the regular contribution limit, catch-up contributions are also available to those who are age 50 or older by the end of the calendar year. For 2023, the catch-up contribution limit is $7,500.
The following table summarizes the maximum annual 401(k) contribution limits for 2023:
| Age | Regular Contribution Limit | Catch-Up Contribution Limit | Total Contribution Limit |
|---|---|---|---|
| Under 50 | $22,500 | $0 | $22,500 |
| 50 or older | $22,500 | $7,500 | $30,000 |
It’s important to note that the maximum annual 401(k) contribution limit is a combined limit for both employee and employer contributions. This means that if your employer makes any contributions to your 401(k) plan, it will reduce the amount that you can contribute on a pre-tax basis.
Eligibility Requirements
To be eligible to contribute to a 401k plan, you must meet the following requirements:
- Be at least 21 years old.
- Have worked for your employer for at least one year.
- Not be a highly compensated employee.
Maximum Annual 401k Contribution
The maximum amount you can contribute to a 401k plan each year is $22,500. This limit applies to both employee and employer contributions. If you are over the age of 50, you can make an additional catch-up contribution of $7,500.
The following table shows the maximum annual 401k contribution limits for different types of plans:
| Type of Plan | Maximum Annual Contribution Limit |
|---|---|
| Traditional 401k | $22,500 |
| Roth 401k | $22,500 |
| Catch-up contribution (age 50 or older) | $7,500 |
Thanks for stopping by and soaking up some 401(k) knowledge! Remember, these limits get adjusted each year, so be sure to check back in with us later for the most up-to-date info. In the meantime, keep saving, keep planning, and keep growing that retirement nest egg! We’ll be here when you need us for another financial deep dive.