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 ($31,000 for those age 50-59 or 64+ and $34,750 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 (or 100% of your salary, whichever is less). If age 50-59 or 64+, the maximum contribution in 2025 is $77,500 and if age 60-63 the maximum contribution is $81,250 in 2025, with catch-up contributions.
Technically, this means that your employer could contribute up to $46,500 in 2025, 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).
If you’re looking for more info on the maximum employer 401K contribution limit (or employee), check out the
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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