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What is the Maximum 401(k) Contribution for 2023?

In 2023, employees can contribute up to $22,500 to their 401(k) accounts, with a higher limit of $30,000 if they are 50 or older and where these limits have increased from 2022.

by Tamilchandran

Updated Dec 22, 2023

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What is the Maximum 401(k) Contribution for 2023?

401(k) Contribution Limits 2023

In 2023, if you have a 401(k) retirement plan through your job, there are limits to how much money you can put into it each year. These limits apply to both the money you add and any contributions your employer makes. Here are the 401(k) contribution limits for 2023:

For Employees

You can contribute up to $22,500 per year to your 401(k) account. If you're 50 years old or older, you can contribute up to $30,000. This is a bit higher than the limits in 2022, which were $20,500 for regular contributions and $27,000 for those 50 or older.

Catch-Up Contributions

If you're 50 or older, you're allowed to contribute an extra amount on top of the regular limit. In 2023, this catch-up contribution is $7,500, up from $6,500 in 2022.

It's important to note that these limits apply across all your 401(k) plans, so if you change jobs and have multiple plans in one year, the total contributions can't exceed these limits.

Additionally, some 401(k) plans allow you to make extra contributions that aren't tax-deductible. About one-fifth of these plans permit this, and in 2023, you can put in a maximum of $66,000 (or $73,500 if you're 50 or older) in total, including both tax-deductible and non-deductible contributions.

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What is the Maximum 401(k) Contribution for 2023?

In 2023, the maximum total amount you can contribute to your 401(k) retirement plan is $66,000. However, if you're 50 years old or older, you can contribute even more - up to $73,500. It's important to note that your total contributions cannot exceed 100% of your annual salary.

These contributions can come from both you and your employer. So, if your employer offers a 401(k) matching program where they match a portion of your contributions, that doesn't count towards your limit. However, there are limits on how much your employer can contribute.

Most employers provide some form of 401(k) contributions, either matching or non-matching. Matching means they match a part of what you contribute, while non-matching means they give you a share of their profits without requiring you to contribute. These employer contributions also have limits, but they are calculated separately for each 401(k) plan you participate in.

So, if you have multiple jobs with different 401(k) plans in one year, each employer can make contributions up to their plan's limit, which is separate from your personal contribution limit.

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Does 401(k) Contribution Limits 2023 Include Employer Match?

In 2023, understanding 401(k) contribution limits involves distinguishing between personal contributions and employer matching. The $22,500 employee contribution limit is exclusive of employer matches, which are additional incentives provided by many companies.

It's crucial to recognize the distinction between personal and overall contribution limits, with the latter encompassing both individual contributions and employer matches, offering flexibility for enhanced retirement savings.

Employee Contribution Limit

In 2023, as an employee, you can personally contribute up to $22,500 to your 401(k) account. This limit covers the money you choose to deduct from your paycheck and invest in your 401(k) before taxes.

Employer Matching

Many employers offer to match a portion of your contributions to encourage you to save for retirement. For example, if you contribute $20,500 and your employer adds an extra $5,000, your total contributions are $25,500. Importantly, the employer's matching contribution does not count towards your personal contribution limit set by the IRS.

Overall Contribution Limit

There's a higher overall limit that includes both your contributions and your employer's contributions. In 2023, this limit is $66,000. If you're 50 years or older, you can go up to $73,500, including catch-up contributions.

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What are the Limits for Highly Paid Employees?

If you're a highly compensated employee (HCE), meaning you earn a high salary, there are special rules and limits that apply to your 401(k) contributions. The reason for these rules is to make sure that wealthier employees don't get an unfair advantage when it comes to the tax benefits of 401(k) plans.

The IRS uses something called the actual deferral percentage (ADP) test to check if employees at different compensation levels are participating fairly in their company's 401(k) plans. If lower-paid employees (non-highly compensated employees or NHCEs) are not participating enough in the plan, it can limit the amount that HCEs, like you, can contribute.

In simple terms, these rules are in place to ensure that 401(k) plans are fair for all employees, regardless of their income. So, if your co-workers who earn less aren't saving enough in the 401(k) plan, it might affect how much you can contribute as a highly compensated employee.

What is the 401(k) Strategy for 2023?

Enhancing your 401(k) strategy in 2023 involves a nuanced approach for optimal retirement planning. From leveraging tax breaks to exploring catch-up contributions and evaluating Roth 401(k) options, these strategies cater to various financial considerations. Additionally, securing employer matches and adopting automated savings practices are integral components to fortify your retirement portfolio. In 2023, here are some strategies to consider for your 401(k) retirement plan:

Qualify for Tax Breaks

In 2023, saving up to $22,500 in your 401(k) can lower your tax bill by $5,400 if you're in a 24% tax bracket. Taxes are deferred until you withdraw the money. If your income is below $36,500 individually (or $73,000 for couples), you may qualify for the saver's credit, worth 10% to 50% of your 401(k) contributions, up to $2,000 for individuals and $4,000 for couples, with bigger credits for lower incomes.

Catch-Up Contributions

If you're 50 or older, you can contribute up to $7,500 more to your 401(k) on top of the regular limit. This can help you save more for retirement and reduce your current tax bill.

Adjust Your Contributions

The 401(k) contribution limit has increased, so make sure your automatic paycheck contributions match the new limit. If you want to max out your 401(k), you might need to save around $1,875 per month (or $937.50 per twice-monthly paycheck). If you're 50 or older, you can save up to $2,500 per month.

Get a 401(k) Match

Aim to save enough in your 401(k) to get your employer's matching contribution. It's like getting free money for your retirement savings. Just make sure you understand the vesting schedule, which determines when you can keep your employer's contributions.

Consider a Roth 401(k)

Some employers offer a Roth 401(k) option, where you pay taxes on your contributions now but enjoy tax-free withdrawals in retirement. This can be a good choice depending on your financial situation.

Choose Low-Cost Funds

Pay attention to the fees associated with your 401(k) investments. Lower-cost funds can help your savings grow faster over time.

Avoid Penalties

Be cautious about when you start withdrawing money from your 401(k) to avoid early withdrawal penalties or missing required minimum distributions after age 72.

Direct Deposit

Set up direct deposit to contribute to your 401(k) automatically, so you don't miss out on saving for retirement.

Increase Savings When Possible

If you receive a bonus or raise, consider directing some of it into your 401(k). Some plans even offer automatic escalation features to increase your savings rate over time.

Don't Stick with the Default

If your workplace automatically enrolls you in a 401(k) with a default savings rate, consider increasing your savings rate, as experts often recommend saving more than the default rate.

401(k) Contribution Limits for 2022 vs 2023

In navigating your financial strategies, understanding the key differences in 401(k) contribution limits between 2022 and 2023 is pivotal. The increased maximum employee elective deferral, catch-up contributions, and defined contribution limits offer enhanced opportunities for retirement savings. Here's a comparison of the 401(k) contribution limits for 2022 and 2023:

Contribution Limits and Thresholds




Maximum employee elective deferral




Employee catch-up contribution (age 50 or older)




Defined contribution maximum limit, all sources




Defined contribution maximum limit (age 50+); maximum contribution all sources, plus catch-up




Employee compensation limit for calculating contributions




Key employees' compensation threshold for nondiscrimination testing




Highly compensated employees' threshold for nondiscrimination testing




Traditional vs Roth 401(k) Contribution Limits

Embarking on the decision between a Traditional and Roth 401(k) involves navigating nuanced contribution limits. While the annual limits remain uniform, the distinction lies in tax implications, with Traditional contributions being tax-deductible, and Roth contributions utilizing after-tax dollars. This comparative guide delves into key aspects, aiding in making an informed choice aligned with your financial goals. Both traditional and Roth 401(k) accounts have the same annual contribution limits for employees and employers.

Traditional 401(k)

  • Contributions are tax-deductible, reducing taxable income.
  • Taxes are paid on withdrawals during retirement.

Roth 401(k)

  • Contributions are made with after-tax dollars.
  • Withdrawals after age 59 ½ are tax-free if certain conditions are met.
  • Not all employers offer Roth 401(k)s, but they're becoming more common.
  • Some plans allow you to save employer matches in a Roth account.
  • There are no income restrictions for Roth 401(k) contributions.
  • Starting in 2024, high earners must make catch-up contributions to Roth accounts.

401(k) Contribution Limits 2023 - FAQs

1. Can I contribute more to my 401(k) in 2023 compared to 2022?

Yes, the contribution limit has increased for 2023, allowing you to contribute more.

2. What is the maximum catch-up contribution for those aged 50 or older in 2023?

The maximum catch-up contribution for 2023 is $7,500.

3. Are there limits on employer matching contributions for 2023?

No, employer matching contributions do not count towards your individual contribution limit.

4. How much can I contribute in total (employee + employer) to my 401(k) in 2023 if I'm 50 or older?

If you're 50 or older, the total contribution limit is $73,500 for 2023.

5. Are there any income thresholds for highly compensated employees in 2023?

Yes, the threshold for highly compensated employees in 2023 is $150,000.

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