Maximum Employer 401K Contributions
I’d like to clear up a very common 401K misconception surrounding maximum contribution limits.
Question: The individual IRS maximum 401K contribution limit is $22,500 in 2023 and $23,000 in 2024 ($30,000 in 2023 and $30,500 if you include the additional $7,500 catch-up contribution for those age 50+). 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 $66,000 in 2023 and $69,000 in 2024 (or 100% of your salary, whichever is less). If age 50+, the maximum is $73,500 in 2023 and $76,500 in 2024, with the catch-up contribution.
Technically, this means that your employer could contribute up to $43,500 in 2023 and $46,000 in 2024, 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?
- What if you Over-Contribute to a 401K?
- Your Employer’s 401K Match is Not a Suggestion or Maximum
- 2023 & 2024 Maximum IRA Contributions
- 401K Matching