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2014 Maximum 401K Contribution Limit Announced

Last updated by on January 28, 2016

Update: the 2015 maximum 401K contribution and 2016 401K maximum contribution amounts have now been released since this post was written. What follows is for 2014.

The Maximum 401K Contribution in 2014

The IRS 401K maximum contribution has finally been officially announced for 2014, after a long delay due to the government (including IRS) shutdown.

The 2014 401K maximum contribution is $17,500 – the same as last year. That ends a two-year streak of increases in the limit from the IRS.

2014 401K maximum contributionLets hope a repeat of 2009-2011 doesn’t ensue. The 2009, 2010, and 2011 maximum 401K contributions had all been stuck at $16,500 prior to the 2012 maximum 401K contribution limit jumping from $16,500 to $17,000. The 2013 maximum 401K contribution then jumped to $17,500.

I have to admit that I am a not that surprised, considering that increases are based of off inflation data from the BLS, and the CPI only increased 1.5% over the past year.

The maximum contribution is applicable to your personal contributions to traditional 401K’s and Roth 401K’s (or a combination of the two, if you have both). It is separate from the employer maximum 401K contribution.

403B and 457B plans will have the same contribution limit in 2014.

2014 401K Catch-Up Contribution

The maximum 401K catch-up contribution per year for those over 50 years old, however, will stay the same at $5,500 over the standard contribution limit in 2014. No increase. Same goes for 403B’s and 457’s.

401K Maximum Contributions Historically

The maximum contribution level has increased in all but seven years going back to it’s start in 1987 (over 75% of the time). Three of the seven years without an increase were 2009 through 2011 (Great Recession)

It’s also worth nothing that the maximum 401K contribution amount has never been cut from one year to the next.

Max Out your 401K in 2014

If you would like to max out your 401K in 2014, take $17,500 and divide it by your total salary from your employer. For example, if you make $70,000 per year (includes bonuses), then take $17,500 and divide by $70,000 to calculate the percentage of your pay you would need to contribute to max out your 401K.

In the above example, it would be 0.25, or 25%. Then, work with your HR department or your 401K administrator to update your 401K contribution percentage.

Going Beyond your 401K

Not everyone will be able to contribute the maximum, no doubt. If you can, however, it is one of the best things you can do for your financial future, particular when a possible employer 401K match is at stake.

If you do max and want to contribute more, you can create a Traditional or Roth IRA. I moved both of mine to TradeKing, who has zero maintenance or inactivity fees if you have a minimum $2,500 balance or make one trade per year. Trades are only $4.95.

If you have left an employer and have old 401K’s sitting around, you may want to consider a 401K rollover to an IRA or your current 401K. You’ll probably be saving money on fees in an IRA versus your 401K.

2014 Maximum 401K Contribution Discussion:

  • Are you disappointed that the 2014 401K maximum contribution was not increased, or is it a non-issue for you?
  • Do you plan on maxing out your 401K this year or in 2014?
  • Have you ever maxed out your 401K?
  • Are you investing in a Traditional 401K, Roth 401K, or both?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Amanda M. says:

    I’m not completely surprise by this since half of my contributing years (now over half) have not had increases. I have been maxing out my contribution in a traditional 401k for several years.

    One thing that I’ve thought about doing to increase this further is to partially switch into a Roth 401k (maybe 75% traditional and 25% Roth and increase from there). This may be an interesting thing for you to do a study on.

    Right now I like that my base income is decreased by the contribution amount, but if I want to and have the ability to save more, I could put it in after tax and stash away an extra 28%.

    Basically, which is better: tax savings now or more money later? I guess more money later is the obvious answer, but the tax savings now give instant gratification.

  • AW says:

    I am not surprised nor disappointed because I wasn’t able to max it anyway. I am able to max my Roth IRA and any extra goes into my 401k (which unfortunately is not employer matched).

  • Tom says:

    I have a SIMPLE IRA plan through my employer. Are the contribution limits for a traditional 401k and a SIMPLE IRA in any way linked?

  • Mike F says:

    Lets say you already max out your 401k and don’t qualify for deductions for IRA contributions and make too much in income for a Roth IRA. Is there anything else that can be done in a tax advantaged way to save for retirement?

    • G.E. Miller says:

      HSA’s, if you have an HDHP. Or you could put in an after-tax 401K and roll that in to a Roth later on.

    • Sandy B says:

      I have contributed after tax to a traditional IRA then convert it to a ROTH. You only pay taxes on the pre-tax amount and earnings when you do the conversion, so there should be almost no taxability when you convert the trad IRA.

      • Andrew A. says:

        Wrong answer. If you contribute to a non-deductible IRA and then convert to a Roth IRA, you must take into account the value of ALL retirement plans when determining the taxability of the rollover. Therefore, the rollover amount will most likely be taxed if you have other retirement plans, such as a 401(k).

        • Ryan says:

          Wrong, Andrew. You have to take into account ALL IRAs, but not all retirement accounts. You would not mix a 401(k) with an IRA in this case. But you do have to account for all Roth and Traditional IRAs when determinign what portion of a conversion would be taxed. be aware, but the strategy mentioned above could be worthwhile.

  • joe bloe says:

    Thanks for the update, but please leave the back-handed jabs out.

    I find it interesting how the government was shutdown for two weeks, but it takes “a long delay” to get the contribution limits out.

    Only two weeks of “after a long delay due to the government (including IRS) shutdown” are attributable to the shutdown. The rest is the IRS’ inefficient operations in the normal course of dysfunctional business.


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