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How Much can My Employer Contribute to my 401K?

Last updated by on February 29, 2016

401K Employer Maximum Contributions

I’d like to clear up a very common 401K misconception surrounding maximum contribution limits.

Question: The IRS maximum 401K contribution limit for 2016 is $18,000. But what exactly does this mean? Does this mean that if my employer matches my contribution dollar-for-dollar that I can only contribute half of the maximum (i.e. $9,000 in 2016)?

Answer: No. The IRS maximum 401K contribution is how much you can personally contribute to your 401K during the year. Your employer’s 401K contribution limit is entirely up to them – but the max on total contributions (employee plus employer) to your 401K in 2016 is $53,000 (or 100% of your salary, whichever is less). Technically, this means that your employer could contribute up to $35,000, if they wanted to, and it would not count against your personal contribution maximum.

employer 401k contribution limitsEmployer 401K Maximum Limit Discussion:

  • What is your employer’s match?
  • Did you think that your maximum contribution was your personal plus your employer’s?
  • Are you going to max your 401K contributions this year?

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  • Dawn/FFL says:

    1. My employer’s match is 66¢ to my dollar after the first year, before that – nothing
    2. I figured it was me only as most employers will state what max they will match
    3.I won’t be maxing at this time until debts are paid down more, then I will increase slowly for less notice.

  • RS says:

    1. 3% flat + 100% match for the first 4% + 50% match for the next 4% => 9% employer contribution for 8% employee contribution
    2. Never thought about it, can’t max anyways.
    3. Need to get rid of home loans first.

  • Alan S says:

    1. Employer contribution is 3% of gross salary no matter what elective contributions are made.
    2. No, I knew that the contribution limit is the employee contribution.
    3. I will max my contribution this year. Hope to do the same with my fiancee (future wife) in the coming years.

  • Julie says:

    1. 6%
    2. Nope, I knew it was just my contribution
    3. No, but I’m getting as close as I can right now (25% of my income)

  • finance suggestion says:

    1. 7%
    2. that was my contribution
    3. I am getting much closer now (33%)

  • Trevor says:

    1. 100% up to 6% of salary
    2. Nope, I knew it was just my contribution
    3. Not this year (single household income and all). I plan to next year.

  • Jac says:

    1. 50% up to 6% of salary
    2. just me
    3. Yes, although I haven’t worked the whole year so I’m going to have to juggle the percentage withheld a bit.

  • Bobbo says:

    1. 96 cents on the dollar up to 7% of salary.
    2. nope, just me.
    3. yes, I’m actually contributing more than the 7% match :-).

  • Yogi says:

    1. 25 cents for each dollar up to 6%
    2. Never thought about this cos I only do 6% and didn’t reach near that ceiling yet
    3. No, not yet .. home loan 🙁

  • anonymous says:

    I get a 200% match up to the IRS max of 16500

    No, I knew it was 49,000 for the upper limit

    Yes, I am maxing out.

  • David says:

    1) Dollar for Dollar. No maximum.
    2) No
    3) Yes

  • Dan says:

    My employer does 4% automatically no matter if I’m on the plan or not but will match an additional 3% if I decide to contribute 3% for a total of 10%. Last year I saved 17% AGI in my Roth 401k.

  • John says:

    My employer has indicated that they can not contribute to my 401k because the average salary in the company is too high. Is there such a IRS rule?

  • Me says:

    1) $1 from me = $1 from my employer with no maximum! That’s right, if I put in the maximum then they do too.
    2) No, because I max out my 401k anytime I can. My employer encourages us to put most of our yearly bonus in 401k to avoid taxes and to double your money.
    3) Yes, I don’t max out in monthly contributions but I do max out with my end of year bonus.

  • David says:

    1) Employer matches 200% up to 5% contribution on first 40k earnings, and 100% match after that. So earning 80k, and 5% employee contribution you end up with 4k employee plus 6k employer for a total of 10k. No company max, just the gov’t limit.
    2) Yes I did think/question that, which is how I found this page
    3) No, and I never will max it out, I max my separate Roth account and have other investments. The 401k is only one portion of my retirement.

    • TR says:

      David – good for you that you are investing in your future. If your employer is willing to match your 401K investment dollar for dollar, I highly recommend that you stop investing in your Roth until you’ve maxed out your 401K first. With a 100% match, that is by far the best investment vehicle you will ever find because it immediately gives you a 100% return on your investment. Max that out and take advantage of an uncommonly high employer contribution. If you have anything left over for investing after that you can go back to the roth which is your second best investment choice.

  • MT says:


    My employer matches a 100% of 6% of my base salary. My question is:
    Is the 6% of base salary the maximum by law for employers?

    Thank you

  • MT says:

    Thank you very much for your prompt replies. I agree with you… I couldn’t find the 6% being dictated by IRS anywhere on their website.
    Enjoy your weekend

  • Ryan Morelli says:

    Great Article, little known facts. I understand 90% of CPA’s don’t know this.

    Here is my question. How about AFTER TAX DOLLARS? if you have you’re own company can you deposit 52k in after tax dollars instead? It is my understanding there is a current tax loophole that allows you to roll after tax dollars, not matter how large(no limit 5500 or 6500) from your 401k to your Roth, also no income limits. So now that we know we can put 52k in…how much of that can be after tax? I would think the whole thing, but I’m not sure.

  • Blaine Sandoval says:

    My employer will match up to 6% of my base salary in contributions. They also contribute an additional 7.5% without any requirement for me to contribute (which they call “profit sharing”). So with my 6%, and the company’s 13.5%, my overall 401k contribution is 19.5% of my base salary.

  • Chris says:

    I run my own s-corp with my wife. Our company policy is to match each personal dollar with two company dollars. So 200%, within gov’t limit.

  • Tom says:

    If the 2014 contribution is $52000 can any portion of that be employer? For example can all $52K come from the employer or is there a benefit to having the employee contribute max %. (Thinking of negotiating deferred comp this way but having ownership of the $) Also, when over 50 does this maximum change?

  • Scott says:

    1. currently matches 6%
    2. no
    3. yes, always max it

    They just ended our pension and are now going to do a full match on the first 10%, so that’s nice, but the pension was better

  • ashi says:

    plz tell current limit minimum to maxmium of employrer scheme i n insurance.

  • 401K for the future says:

    $1 for $1 up to 15%

    I’m 33 and have only been contributing $20-60 per week into the 401K since age of 25. However, its been 2 years since I started maxing out and now contribute $175 per week.

    How common is it for employers to contribute such a high percentage?

    I’ve talked to many people and have looked for articles related to my question but could not find any info.

    Even my buddy, who just became a financial advisor, could not believe my employer is doing so until I showed my paperwork. He seems to believe only CEO’s from top Corporations have such benefits.

  • Chris says:

    What is the employer’s end date for depositing their 2013 contributions into employee’s account? Jan – Aug 2013 they did a 1.5% match on first 3% and then in Aug combined 2 payroll offices into 1 (which had a 3% match on first 6%), all along other employees (combined new payroll ofc.) had been getting that 3% since Jan 2013. Us employees in CHI ofc have not seen Jan-Aug 2013 deposit and from Aug we started getting bi-weekly the 3% employer match as other employees. We have been losing interest on what employer’s match would have been for those 8 months while other employees have had the advantage of employer’s match being deposited all year.
    I ask HR about his and I am told co. financial board is discussing. Something is not right.

  • Joe says:

    1. employer’s match? 1 if I put in 1, then they give me 5%. So, total of 6% if you put in 1%.
    Did you think that your maximum contribution was your personal plus your employer’s? Did not know – that’s why I’m reading this.
    3. max your 401K contributions this year? I will max my contribution.

  • Angela says:

    Looks like there are a lot of great company matches out there.
    1. My company offers 9% just for being an employee. On top of that they will match dollar for dollar an additional 3%. So if you max out the company contribution they provide you 12%.
    2. I did know know the max was only my contribution.
    3. I am not hitting the IRS max because I am building up 6-12 months of expenses for an emergency fund.

  • Enrique says:

    can the company contribute 100% of the 53000 max in a 401k plan to

    a key employee account.??

  • Mitchel says:

    In your example, the employer can contribute an additional $35K, can the employer contribute that amount to only certain individuals, like the owners and perhaps $5K to the rest of the employees?

    Or…does it have to be the same amount to everyone?

  • Gary says:

    If an employers offers a 401k with a match, they legally have to offer this to ALL full time employees, correct?

  • Darren P says:

    With everyone wanting to get back at ‘Corporate America’ you would think that having them donate to the workers 401K or 403B which may present tax breaks for the corporations would be frowned upon too. In losing the ‘retirement perks’ that once made the American workforce and Unions strong the American people have suffered again. How is anyone in their 40’s and below ever going to become retirement eligible! Perception is that is not want politicians who are no where near middle class Americans wages want anyone, they keep promising ‘free’ stuff and if the education system won’t teach our youth that there is NO SUCH THING AS A FREE LUNCH. The down trodden walk over them will continue.

  • John A says:

    Can my employer do the same matching for *ROTH* 401K’s too?

    Roth is usually after tax dollars, so I bet that the employer cant but thought that I’d ask.


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