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Home » 401K

How Much can My Employer Contribute to my 401K?

Last updated by on 30 Comments

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 2014 is $17,500. 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 ($8,750)?

Answer: No. The IRS maximum 401K contribution is how much you can personally contribute to your 401K during the year. Your employer 401K contribution limit is entirely up to them – but the max on total contributions (employee plus employer) to your 401K in 2013 is $51,000 and $52,000 in 2014 (or 100% of your salary, whichever is less). Technically, this means that your employer could contribute up to $34,500 in 2014, if they wanted to, and it would not count against your $17,500 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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30 Comments »
  • 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:

    Hi

    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

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