Maximum Employer 401K Contributions Differ from Maximum Employee Contributions
I’d like to clear up a very common 401K misconception surrounding maximum 401K contribution limits, and how the employer 401K contribution limit differs from the employee 401K contribution limit. I’ll phrase it in the form of a question and answer so it can best be understood.
Question: The individual IRS maximum 401K contribution limit is $23,500 in 2025 ($31,000 for those age 50-59 or 64+ and $34,750 for those age 60-63 with catch-up contributions) and $24,500 in 2026 ($32,500 for those age 50-59 or 64+ and $35,750 for those age 60-63 with catch-up contributions). 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 limit, for example?
Answer: The IRS maximum 401K contribution is the max amount of tax-advantaged contributions that you (as an employee) can personally contribute to your 401K during a calendar year. Your employer’s maximum 401K contribution limit is entirely up to them – but the max on total contributions (employee plus employer) to your defined contribution 401K is $70,000 in 2025 and $72,000 in 2026 (or 100% of your salary, whichever is less). In IRS code jargon, this is the limitation for defined contribution plans under section 415(c)(1)(A).
Note that catch-up contributions are not included within the section 415(c)(1)(A) limit. With catch-up contributions, the maximum employer + employee defined contribution total increases to:
- Year 2025, if age 50-59 or 64+: the maximum contribution is $77,500
- Year 2025, if age 60-63: the maximum contribution is $81,250
- Year 2026, if age 50-59 or 64+: the maximum contribution is $80,000
- Year 2026, if age 60-63: the maximum contribution is $83,250
Technically, this means that your employer could contribute up to $46,500 in 2025 and $47,500 in 2026, separate from your maximum employee contribution. Most employers do not contribute that much, however, and through after-tax contributions and an after-tax to Roth conversion, or “mega backdoor Roth“, it’s possible for you to contribute more than the individual contribution maximum in a given year (if your employer allows it).
Employer 401K Maximum Contribution 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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