How Much Can I Contribute To My 401k?

info_moduleOne of the common questions we are asked is ‘how much can I contribute to my 401k’?  Well, there are rules in place limiting the amount of income you can invest into your 401k, although these limits affect relatively few people.

CBS News reported in 2011 that just 5 per cent of around 60 million 401k plan participants actually contributed the maximum amount to their retirement savings.

The simple answer to the above question is that you can contribute whatever you like up to the maximum limits.  However, if you want to maximise your income in retirement then it may be worth considering paying in somewhere approaching the maximum.  Our guide explains the 401k contribution limits.

Maximum 401k contribution limits

Contribution limits to 401k plans are reviewed every year depending on inflation.  While the maximum limit was the same between 2009 and 2011, the contribution limit to 401k plans increased in 2012 and 2013.  The pre-tax 401k contribution limits set by the IRS over the last few years have been:

  • 2008       – $15,500
  • 2009       – $16,500
  • 2010       – $16,500
  • 2011       – $16,500
  • 2012       – $17,000
  • 2013       – $17,500

So, this means that you in 2013 you can contribute up to $17,500 into your 401k plan.

‘Catch-up’ contributions

Since the Restoring Earnings to Lift Individuals and Empower Families (RELIEF) Act of 2001, you are now allowed to catch up on lost time and to enhance your retirement fund.

If you have reached the age of 50 or over, you can make an additional ‘catch-up’ contribution to your 401k plan.  This additional limit allows people who reach the age of 50 before the end of the calendar year to make additional 401k contributions on a pre-tax basis.  The past and current ‘catch-up’ limits are:

  • 2008       – $5,000
  • 2009       – $5,500
  • 2010       – $5,500
  • 2011       – $5,500
  • 2012       – $5,500
  • 2013       – $5,500


So, if you are aged 55 in 2013, you can contribute $17,500 to your 401k plan plus an additional amount of $5,500 – totalling $23,000.

Pre-tax contributions are more affordable than you think

As we mentioned earlier, only around 5 per cent of 401k plan holders maximise their contributions every year.  However, making these investments could be more affordable than you think.

CBS News reports that ‘while contributing $17,000 a year may sound like a lot of money, it’s only about $210 per week after the tax savings are factored in.  Another way to look at it is that when you make pre-tax contributions of $17,000 to your 401(k) plan, you can save approximately $6,000 in federal and state income taxes each year.’

When working out what to contribute to your 401k plan, it’s always worth remembering that you should invest something rather than nothing.  Pay in what you can afford and increase your contributions when you can.

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Total 80 comments are posted
  1. Will the 401k contribution limits be the same in 2013?

    Posted by : Tom D
  2. Tom – thanks for your question. The 401k contribution limits are likely to be higher in 2013. That’s because the contribution limits that apply to 401k plans will be indexed for inflation. These limits can move up in $500 increments in the future. Both the contribution limits and ‘catch-up’ limits will be adjusted for inflation.

    Posted by : admin
  3. Can I add to a 403b (with a different employer) if I have already maxed out my contributions to my 401k?

    Posted by : Adrian
  4. If my company putting some contributions to my 401k plan, does that amount count toward the 17k limit for this year?


    Posted by : Huey
  5. does the max contribution of $17,000 include employer matching amounts?

    Posted by : dave
  6. Does this include any match, or is it only my contirbution?

    Posted by : Chris
  7. When does the Government determine the next year limits? I assume it can’t be much later than November so that companies can adjust their program.

    Posted by : Alec
  8. Can catch up contributions be made retroactively for past years?

    Posted by : David B
  9. If I payoff the 17,000 before my fifith birthday ,Do I need to call my plan administrator toask them to take out additional money or does that happen automatically?

    Posted by : Johnny i
  10. Guys, the limit does include employer contributions. David B, you cannot make retroactive contributions.

    Posted by : Freddie
  11. Is the yearly limit just the individual’s contributions or the sum of individual plus employer contributions ?

    Posted by : Dave
  12. When will the limits be published for 2013 401(k) contributions and catchup? How will this ‘inflation’ calculation work? Is this an annual adjustment, quarterly, etc. I cannot find anything concrete on the government site regarding the limits for 2013 so I can set up my budget for next year. Thanks in advance,

    Posted by : Keyslynda
  13. Do you know what date the 2013 401K and catchup limits will be announced? Thanks!

    Posted by : Rick B
  14. What happens if you go over the 17K limit?

    Posted by : Pedro
  15. Employer contrbutions do not count against the 17k you can contribute. They are in addition.

    Posted by : Kim Cascio
  16. Your employer’s fund management company should be monitoring it, and going over 17K should be an option. However, if you do, they will refund the money back to you and you will have to pay taxes on the money if you are going into the 401k pre-tax

    Posted by : Kim Cascio
  17. The 17k limit does NOT include employer contributions. It applies only to your pretax deferrals and/or Roth 401(k) contributions made during that year. There are other limits that apply to employer contributions based on the IRS’s “annual compensation limit.” For 2012, the annual compensation limit is $250,000. For example, if your company’s 401(k) plan makes upt to a 3% matching contribution, the the company match for the year cannot exceed 3% of $250,000, or $7,500. By the way, the IRS generally announces the next year’s limits in mid-October.

    Posted by : AndiB
  18. The $17,000 limit only applies to your personal contribution (elective deferal). The maximum combined contribution limit, employer, employee, and other, is $50,000 or 100% of your annual salary, which ever is smaller.
    One other item to note: you should be careful not to hit your max $17k too early. If you do, and end up making zero contribution for several pay periods you will miss out on the matching contribution from your employer for those pay periods. Remember this is a “matching” contribution, if you contribute zero your employer will match that with zero.

    Posted by : Bruce
  19. The 17k does not include the employer’s contribution– 17k is how much you personally can contribute, regardless of what your employer kicks in. Keep in mind, this also doesn’t include the 5k you can contribute to your Roth IRA, which means the total amount added to your retirement plan every year (between your contribution, your employer’s match, and your Roth IRA) is closer to 30k.

    Posted by : Erik
  20. Employer contributions are separate from the 401K max so you can contribute 17,000 your self and the employer contributions are in their own bucket.

    Posted by : Eric Nord
  21. The $17k is the limit for the employee contributions. If you employer matches or contributes more money through a profit sharing plan that would be in addition to the max.

    Posted by : Carrie
  22. Freddie is wrong above. The $17,000 limit is on YOUR contribution or “elective deferral.” It does not include any company matching funds. There are some limits to the total amount that can be contributed, including things like company match, but those limits are much higher and would rarely come into play for the average 401(k) contributor.

    Posted by : Paul
  23. The $17,000.00 does NOT include the company match. For example: if you designate a total of 17000 per year to your 401k, any employer matching contributions do NOT count toward your maximum–so if you have a total of 17000 deducted from your income in 2012 and put into your 401k and your employer also made contributions of 5000, you have effectively put 22000 in your 401k account where you maxed out YOUR contribution of 17000 but your company made contributions as well.

    To Pedro: Some companies (like mine) will not take out more than the max. For example, it may be very difficult to calculate an exact percentage or amount of your payment to be designated to your 401k if you want to hit exactly 17000 with your last paycheck in 2012. And it becomes even more difficult if you get a pay increase or bonuses or commissions. Therefore some companies “chop” you off right at 17000 even if it means taking only a portion of what would have otherwise been designated for your 401k for a particular pay period.
    If you have more than one employer or if your employer doesn’t “chop” you off at 17000, YOU need to pay attention to your contributions. But never fear, when you submit your taxes, it will reveal if you have contributed more than 17000 into 401k account(s) during the year. You will be directed to have some money distrusted to you (and it will be taxed, considering the excess contributions were made per-tax–unless you contributed to a ROTH-401k) so you can computer your tax forms as it is the IRS that polices 401k contributions.
    I hope this makes sense. PS: yes, some companies offer a ROTH-401k–where you contribute post-tax dollars.

    Posted by : Jon
  24. Distrusted=distributed above and
    Computer=complete above. Darn spellchecker!

    Posted by : Jon
  25. Be careful what you read. Some posters have said that these limits (noted above) include employer contributions. THEY DO NOT! These limits are individual pre-tax contribution limits. Employer matching contributions have their own [additional] limits ($33,000 ??), for a total limit of $50,000. In addition to all that, there is a potential catch-up contribution limit of an additional $5,500 — if you are over age 50, for a grand total limit of $55,500.

    Posted by : TxPlanner
  26. No, $17,000 does not included employer contributions although there is a limit on those as well ($50,000 I believe). Generally once you hit the 17k limit your employer will stop making deductions from your paycheck. In most cases that also means that your employer will stop your match for the rest of the year as well.

    So it is in your best interest to do the math and don’t hit the limit before the end of the year.

    Posted by : Chris
  27. Freddie is wrong. Employer contributions do NOT count towards the maximum employee contribution.

    The maximum employee contribution for 2012 is $17k. The maximum annual contribution is $50k. Meaning, you could contribute $17k annually and your employer could contribute an additional $33k. Obviously, most don’t. But if you owned your own company…

    Posted by : Jimmy
  28. Can I contribute additional money to a traditional IRA once I hit the $17000 limit and my AGI is under the limit?

    Posted by : Paul
  29. Can I contribute to a self-employed 401(k) plan as well as a corporate plan ($17k each) if I am also employed by the corporation?

    Posted by : Anonymous
  30. Can I contribute the $22,500 to a self employed plan if I have already contributed the $17,000 to my company sponsored plan in the same year?

    Posted by : Betsy
  31. @Freddie: No, the yearly limit is for your elective deferrals (i.e. contributions) only

    Posted by : Sean
  32. Depending on your company, the contributions over $17,000 will go in after-tax.

    Posted by : Jeff
  33. The maximum contribution limit does NOT include employer contributions. Employer contributions are just an added bonus. Also, you must inform your 401 company what you want to do about after tax contributions once that limit is reached. After tax contributions are similar to a roth ira in that those contributions and their earnings will not be taxed when withdrawn at retirement age.

    Posted by : Tim
  34. The $17,000 limit (or $22,500 for those turning or over 50) does not include employer contributions. Employer contributions are on top of the employee’s contribution limits. The max contribution with employer’s contribution is $49,000 per year. Freddie’s post is incorrect.

    Johnny i – Yes, you will need to affirmatively change your contributions. Plan administrators won’t make changes without your instructions.

    Posted by : Kris
  35. Freddie, you are not correct. The 17K limit is for the employee, the compnay match can push you over the $17K limit without penalty.

    Posted by : TIM
  36. Annual contribution deferral limit (402g limit) is defined as the total yearly EMPLOYEE deferral limit. Sepaerately, There is also a maximum 401k contribution limit (415 limit) that applies to all EMPLOYEE AND EMPLOYER 401k contributions. It’s the lesser of 100% of the employee’s total pre-tax compensation or $50,000 for 2012. (It moves just as the annual employee limit does, so it’s usually different from year to year.) For employees over 50, the catch-up contribution limit is also added to the 415 limit.

    Posted by : Mac
  37. If you contribute in excess of the limit, you’re supposed to let your plan know asap. Then your plan must distribute the excess, plus any earnings generated by the excess. Yes, this is taxable income. The exess is taxable in the year the contribution was made. The earnings are taxable in the year you correct it.

    Posted by : Mac
  38. You are allowed $17k in personal contributions plus you get your employer match.

    Posted by : Carolyn
  39. If you put the max amount in your employers plan can you put the catch up in another plan

    Posted by : Chuck
  40. Wait, I have (combined with my employer) contributed close to $20,000 thus far. You are saying that the limit includes employer contributions. What happens in my case then?

    Posted by : John R
  41. Is there a percentage of your pay as a determining factor as to what amount of money can be used towards the 401K?

    Posted by : Ken E
  42. 401k contribution limit for 2013 rises $500 from $17,000 to $17,500. The amount refers only to the employee contributions and not employer contribution. You can put $17k this year and $17.5 next year. The company match is just extra money for you.

    Normally the company stops your payroll contributions once you reach $17k. If you reach it too soon you likely will lose out on company match.

    Posted by : Al R
  43. This limit is only for personal contributions. There are other limits that restrict contributions made on your behalf. In addition to the limit on elective deferrals, annual contributions to all of your accounts – this includes elective deferrals, employee contributions, employer matching and discretionary contributions and allocations of forfeitures to your accounts – may not exceed the lesser of 100% of your compensation or $49,000 for 2011 and $50,000 for 2012.

    Posted by : Eric
  44. Is there a matching contributions maximum? In 2008 they stated $230,000 in salary was the max times the 4% match

    Posted by : Laura
  45. nevermind $250,000 for highly compensated ee’s

    Posted by : Laura
  46. The Bureau of Labor Statistics announced September CPI earlier in Oct, paving the way for the revised 2013 401k limits. The inflation adjusted 401k, 403b, and 457 contribution limit will be $17,500 in 2013..

    Posted by : Tim Conway, Jr
  47. 401K limits are for employee part only, employer contribution isnt counted. also the payroll company automatically caps/adjusts this at the max limit allowed per year and its in their system. remember 401k contributions come out of your paycheck and you cant make it individually so it would technically not go over the max limits. now as far as what happens if you do somehow manage to add more funds when tax time comes you wont be able to utlize the tax benifit as the tax softwares and the tax tables will not allow this, hope it makes sense to you now. either way whatever you do “you must try to contribute, no matter how small the amount or if its the max amount”

    Posted by : 401KGuru
  48. Here is a silly question but unfortunately it apply to me. My employer match my 401k contribution up to 6%. Let said I make $10k per month and I contribute 20% of my income each month. Therefore, I contribute $2000 and my employer matches $600 to my 401k per month. At the 9th month , I max out my contribution ($17000) and my employer have matched $4800 ytd. Do you think I will still get matching from my employer for the remaining of the year? The 6% of my annual income suppose to be $7200. Thanks.

    Posted by : Boone
  49. Are these limits per person or per household? Can I put in $17,000 and my wife also put in $17,000 to a 401K?

    Posted by : Anonymous
  50. Can both my wife and I put in $17,000 each?

    Posted by : CAP
  51. If I am 55 and my 2012 compensation exceeds $250,000, can I still contribute the $17,000 plus the $5500 catchup to my 401k?

    Posted by : woodfair
  52. I am 51 years old. I contribute to a pre-tax 401K and to a Roth 401K from payroll deduction.

    My 401K Roth for 2012 is at 5288.47 and my pre tax 2012 401K is at 17211.53. In total this equals $ 22,500.

    In a recent profit sharing check contributions to both IRA’s were not taken out “because you have reached your 22,500 maximum” – this nailed me for taxes and also precluded me from a recently enacted 401K match on pretax contributions.

    What is the reality – I was under the impression PRE TAX Contributions were limited to 22,500 – I’m getting taxed (ie the ROth is an after tac contribution).

    If they are correct – it would have been nice to know as I think I just paid way more in taxes than I needed to !

    Can you please provide the tax code reference – if I’m correct. I’m arguing with accountants !!!

    Posted by : MattB
  53. I left my job in October 2012, I was 59 1/2 at the point, but deferred $23,000 instead of $22,500 as the anuual limit. What can I do before the year ends to return the additional $500.00?

    Posted by : David
  54. What happens if you reach the annual limit (max) in contributions before year end?

    Posted by : Cliff
  55. I’m 60 and self employed with an LLC

    my corp will put in the $11,500 for me in 2012 and is it correct that I can put the $17,000 plus $5,500 additional as a catch up contribution since I’m an old fart?

    Posted by : Reese
  56. If I put the max of 22.5K into my 401k plan, can I also put 6K into a Traditional IRA in the same year?

    Posted by : Ash
  57. after saving the max into the 401k, can I also save into a Traditional IRA?

    Posted by : Ash
  58. If I earn $20,000 per year can I contribute $17,000 into my 401K plan or is there a % of what my income needs to be to get the max contribution?

    Posted by : Marina
  59. Boone,
    Check with HR. The company I work for says it will calculate the shortage of the employer contribution and add it in March of the following year. But your company could be different.
    They also only match to 3%.

    If you company does not, you’ll have to do the math to max out and get a full match on your last paycheck of the year.

    Posted by : Les
  60. in this year i have made 401k cotribution in my company retirement plan,as $ 2000/-,my company make contribution 1.5 times of it ,means $ 3000/-,i am asingle house hould,how much maximum invest in ira ,so i get maximum tax savings in 2012,my age is 40 years.

    Posted by : Sevak

    Posted by : rodolfo castanon jr
  62. I believe there is a mistake or typo in your information. Just below where you list the allowed contributions for the years 2008-2013, you say that “if you have reached the age of 55 in 2013, you can contribute 17,500 into your 401k plus an additional amount of $5500-totaling $23000.” I believe the correct age is 50, not 55, for this catch-up contribution.

    Posted by : Mike
  63. If I’m withdrawing my 401k early what do I need to know for filing for 2013?? I’m not of retirement age. Its taking 2700 in taxes already before they cut the check.

    Posted by : erica
  64. If I am 50, can i contribute 23000 from my pay into my 401K over 12 months?

    Posted by : K.K.
  65. I am 67 and have never put in the max. How many years forward can I go back and contribute the $5,000 “catch up” and is the $5,000 elgible for employer match? Is the “catch up” payroll deductible and how is it distinguished when reporting to the IRS.

    Posted by : Terry
  66. K.K. – Yes. The standard 401k contribution limit in 2013 is $17,500 and the ‘catch-up’ limit for over 50s has risen to $5,500.

    Posted by : admin
  67. I will be getting a large retirement amount at age 65, About 60% is in a qualified plan and can be rolled over to my 410K. Is there any way to reduce the tax bite on the rest since we no longer have income averaging?

    Posted by : Arthur
  68. How do you make the catch up contribution of $5,500 to your 401K, is there a special form? Could I open a new 401K and add to that?

    Posted by : cheryl
  69. How much New York State Tax do I have to pay on $48K in my 401K plan?

    Posted by : Alice
  70. Cheryl – thanks for your question. All 401(k) contributions must be made through payroll deduction, including your catch up contributions. If you want to make a $5,500 contribution from a single paycheck (such as a bonus check) make sure you can afford this reduction in your salary for the applicable pay period.

    Posted by : admin
  71. I changed jobs and over-contributed to the over-50 catch-up portion, but under contributed to the regular pre-tax side in 2012. The total is less than the maximum for the year ($22500). Can I re-assign the catch up excess to regular contributions and not have to make a withdrawal? 1) From the viewpoint of the IRS 2) From the viewpoint of a typical plan.

    Posted by : Huigi
  72. If a company matches up to 6% of the contribution, what does it matter if you max early throughout the year?
    The match is 6% of your contribution amount not 6% of your base salary.

    Posted by : Kaven
  73. Is there any limit to after-tax contributions to a 401K plan that allows these type of contributions once the pre-tax max for the year is reached? Thank you.

    Posted by : Linda
  74. If your employer has a company match, is that included in your limitations?

    Posted by : Gary
  75. I admit, I’m pretty stupid when it comes to retirement savings, it’s something I’ve just never earned, but I make six figures and I only have about $50K in my ROTH, and to be honest, I have no idea how much is in my current fund with my current employer. But, I think I could swing doing the max each year… I just worry about geting pounded by the markets and losing everything. I had $40K in my ROTH when the markets tanked in 2009, and they cut me for about $8K before the bleeding was over.

    Is a regular 401k a little safer? I see that indexes are better for risk, and I’m willing to have a little less and maybe never get to $1MM to be slighly risk adverse.

    Posted by : Trent
  76. ok. So I am contributing to my company 401k and putting in 2000.00 a month until I max out for the year. Now my office manager came and told me that I can only contribute 6000 this year maximum. This is because of the amount of employees and the amount of employees enrolled into the plan? I have never heard this before. I actually have three other plans from past employers and always maxed out my contributions every year. Why is this or am I being bamboozled for some reason. And btw the employer doesn’t match or contribute. So why is this?

    Posted by : Dan
  77. If I retire in April of 2015 can I adjust my pre-tax contribution % in my employer 401K to max out to 17500 and 5500 catchup before April 1, 2015. Is there any upside or downside to doing this? Thanks

    Posted by : Carla Johnson
  78. Good article, very concise, clearly written and easy to understand. Is it safe to assume that in 2014 the max contribution increased by $500 and will do the same in 2015?


    Posted by : Ron B
  79. asdasdasd asd asd asd asd as

    Posted by : Karen
  80. What is the maximum 2014 contribution to a 401k for a 55 year old?
    Does $52,000 include the catch-up of $5,500?

    Posted by : Marty