2019 & 2020 Maximum 401K Contribution Limits

The IRS just announced a 2020 maximum 401K contribution limit of $19,500, which is the max you can contribute to a 401K in a given calendar year. This is an increase over the 2019 maximum 401K contribution limits (which had also increased from the year prior).




The IRS adjusts maximum contribution limits according to changes in the consumer price index (CPI).

maximum 401k contribution limitThe maximum 401K limit is set annually by the IRS and it applies to your personal employee contributions to both traditional 401K’s and Roth 401K’s (or a shared combination of the two types of accounts, if you have both). It is separate from the maximum employer 401K contribution (which has its own limit). If you have self-employment income, this maximum also applies for the “employee” contribution portion of Solo 401K’s.

Here are the contents of what will be covered in this article:

Before getting to the new 2020 limits, let’s first recap the 2019 maximum 401K contribution limits, as you can continue to contribute through the end of 2019. Please note that 401K’s do not allow you to contribute up through the tax deadline for a given year, as IRA’s do.

2019 Maximum 401K Contribution Limits

The base 2019 maximum 401K contribution limit is $19,000 (an increase of $500 over the prior year).

Similar pension plans, like the 403B, 457B, and government TSP have the exact same maximum contribution limit as the 401K.




2019 401K Catch-Up Contribution

The 2019 401K catch-up contribution is $6,000 (no increase over the prior year). This catch-up contribution also stays the same for 403B’s, 457B’s, and the government TSP. The catch-up contribution is in addition to the standard contribution limit, making the total contribution amount $25,000.

The catch up contribution is only available to those age 50 and older who are trying to “catch up” for retirement in their latter years.

2020 Maximum 401K Contribution Limits

The base 2020 maximum 401K contribution limit is $19,500 (an increase of $500 over 2019).

As noted prior, similar pension plans, like the 403B, 457B, and government TSP have the exact same maximum contribution limit as the 401K.

2020 401K Catch-Up Contribution

The 2020 401K catch-up contribution is $6,500 (a $500 over 2019). This catch-up contribution also stays the same for 403B’s, 457B’s, and the government TSP. The catch-up contribution is in addition to the standard contribution limit, making the total contribution amount $26,000.

The catch up contribution is only available to those age 50 and older who are trying to “catch up” for retirement in their latter years.

Historical 401K Maximum Contribution Limits

How do these maximums compare to previous years? Here’s the IRS’s recent history on maximum 403B, 457B, TSP, and 401K maximum contribution limits over the last few years:

Year403B, 457B, TSP, & 401K Contribution Limits (under age 50):403B, 457B, TSP, & 401K Contribution Limits (over age 50). Includes catch-up contribution:Total Defined Contribution Limit (employee + employer):
2008$15,500$20,500$46,000
2009$16,500$22,000$49,000
2010$16,500$22,000$49,000
2011$16,500$22,000$49,000
2012$17,000$22,500$50,000
2013$17,500$23,000$51,000
2014$17,500$23,000$52,000
2015$18,000$24,000$53,000
2016$18,000$24,000$53,000
2017$18,000$24,000$54,000
2018$18,500$24,500$55,000
2019$19,000$25,000$56,000
2020$19,500$26,000$57,000

The max contribution limit has increased in all but eight years going back to its inaugural year in 1987 (over 75% of the time). Five of those eight years without an increase happened since 2010 (2010, 2011, 2014, 2016, and 2017). It’s also worth nothing that the maximum 401K contribution limit amount has never declined from one year to the next.

How to Max your 401K

If you would like to make the max 401K contribution (a wise move, especially if your employer offers a 401K match), you’ll need to first do some simple math.

In 2020, for example, take $19,500 and divide it by your total salary or expected wages from your employer. For example, if you make $78,000 per year (before taxes), then take $19,500 and divide by $78,000 to calculate the percentage of your pay you would need to contribute to max your 401K.

In the above example, the result would be 0.25, or 25%. Next, work with your HR department or your 401K administrator (often within your 401K account) to update your 401K contribution percentage.

Taking your Retirement Contributions Further

Not everyone will be able to contribute the maximum 401K contribution. If you can, however, it is one of the best things you can do for your financial future, particularly when a possible employer 401K match is at stake. Matching funds are free money and can quickly boost your retirement outlook.

If you do contribute the maximum and want to add even more to your retirement, you can also create a Traditional or Roth IRA (note: the maximum IRA contribution is $6,000 for 2019 and 2020).

If you have changed employers and have old 401K’s sitting around, you may want to consider a 401K rollover to an IRA or your current 401K, in order to consolidate your 401K’s. You may be able to save money on fees in an IRA versus your 401K.

401K Maximum Contribution Discussion:

  • Do you plan on making the maximum 401K contribution in 2019 or 2020?

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7 Comments

  1. Juan
  2. Nick
  3. Gregg L. Friedman MD
  4. Dan Mannerino

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