401(k) Contribution Limits 2022 and 2023

401(k) Contribution Limits 2022 and 2023

Table of Contents
Table of Contents

One of the simplest and most efficient ways to save for retirement is through your employer's 401(k) plan if one is offered. The ability to automatically contribute a portion of your pay into your account is a key benefit of 401(k) plans, but there are restrictions on the amount you can put in.

The Internal Revenue Service (IRS) reviews and occasionally modifies the maximum contribution thresholds for 401(k) plans, individual retirement accounts (IRAs), and other retirement savings instruments each year, typically in October or November. The IRS issued updates for 2023 in October 2022.

This article will break down all the aspects and present them in the simplest form to help you.

Let’s begin.

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What are the 401(k) Contribution Limits for 2022?

In 2022, the 401(k) contribution limit for Roth and pretax contributions is $20,500 for employee contributions and $61,000 for employee and employer contributions combined.

If you're 50 or older, you can contribute up to $6,500 in catch-up contributions, bringing your employee contribution limit to $27,000. Based on your plan, you may be able to make post-tax contributions that are greater than the pretax and Roth contribution limit. However, it should be less than the combined employee and employer contribution limits. This will help you invest even more for retirement.

Total contributions cannot exceed your annual salary at the company that administers your plan.

What are the 401(k) Contribution Limits for 2023?

For 2023, the employee contribution limit is $22,500, and the combined employee and employer contribution limit is $66,000. If you're 50 or older, you can make an extra $7,500 in catch-up contributions, bringing your employee contribution limit to $30,000.

Depending on your plan, you might be able to invest more for retirement by making post-tax contributions that go above the pretax and Roth contribution limits. However, it should be less than the combined employee and employer contribution limit. Total contributions cannot exceed your annual salary at the company that administers your plan.

Employer Contributions

Participating in a 401(k) plan has the additional advantage that your employer may make contributions on your behalf. Many employers match employee contributions, for example, by adding 50 cents or $1 for every dollar contributed by the employee.

In addition, up to a certain amount, employers have the option to make elective contributions regardless of the employee's contribution level. For 2022, the total employer and employee contributions are limited to $61,000 or 100% of employee compensation, whichever is less. The base limit for workers aged 50 and up is $67,500, which includes the $6,500 catch-up contribution.

The total employer and employee contributions for 2023 are limited to $66,000. That limit rises to $73,500 with the $7,500 catch-up contribution.

Roth 401(k) Contribution Limits

The Roth 401(k) contribution limits for 2022 and 2023 are the same as the traditional 401(k) contribution limits. If you already have access to both a Roth and a traditional 401(k), you can contribute up to the annual maximum in each.

In other words, if you're under 50, you can't contribute more than $20,500 to your 401(k) accounts in 2022, regardless of how many accounts you have.

Limits Applied for Highly Paid Employees

Highly compensated employees (HCE) are subject to stricter contribution limits if they make a very high salary. The IRS uses the actual deferral percentage (ADP) test to make sure that employees of all compensation levels participate proportionately in their employers' plans. This prevents wealthy workers from unfairly benefiting from the tax benefits of 401(k) plans.

Non-highly compensated employees (NHCEs) who do not participate in the company plan may limit the amount that HCEs can contribute.

Comparing 2022 and 2023 Limits

The chart below shows how the rules and limits for defined-contribution plans (401(k), 403(b), and most 457 plans) will change in 2023 versus 2022.

Defined Contribution Plan Limits




Maximum employee elective deferral




Employee catch-up contribution (if age 50 or older by year-end)*




Defined contribution maximum limit, all sources




Defined contribution maximum limit (if age 50 or older by year-end); maximum contribution all sources, plus catch-up




Employee compensation limit for calculating contributions




Key employees' compensation threshold for nondiscrimination testing




Highly compensated employees' threshold for nondiscrimination testing




Those turning 50 at any point in the year are eligible for the catch-up contribution limit for participants who are 50 or older. It applies, for example, if you were born on New Year's Eve.

401(k) Contribution Limits when You have Multiple 401(k) Plans at Different Employers

You are only allowed to contribute up to the total annual employee contribution even if you have access to multiple 401(k) plans through various employers.

If you have two 401(k) plans, for instance, you can decide to divide your 2022 maximum contribution of $20,500 between the two. Then, each employer may contribute up to $50,750, whichever is less, or your overall compensation from that business.

These limits do not apply to the amount you can contribute to an individual retirement account (IRA) each year. You can save the maximum amount allowed by law in both a 401(k) and an IRA.

401(k) Contribution Limits After Tax

If you have reached your 401(k) contribution limit as an employee, you may be able to save more for retirement in your workplace plan through after-tax contributions. In other words, even though your after-tax contributions may help investments grow while they are in your 401(k) account, you might still have to pay taxes on that money again when you withdraw funds in retirement.

If your current employee and employer contributions do not go over the limit, you might be able to contribute up to the annual maximum allowed by your plan for employee and employer contributions.

For instance, in 2022, if you were under 50 and made a contribution of $20,500 and your employer made a contribution of the same amount, you could make an additional after-tax contribution of up to $20,000 to make a total contribution of $61,000.

Remember that not all 401(k) plans allow for after-tax contributions. There are alternative strategies to take into consideration, such as an IRA, if yours doesn't or if you simply want to save even more than after-tax contributions alone permit.

What Happens if You Make Too Many 401(k) Contributions?

If you contribute too much to your 401(k), you could face steep penalties. This includes a 10% fine plus any unpaid income taxes on the excess contributions when you withdraw them. When you file your taxes, you can report excess contributions on Form 1099-R.

Fortunately, most 401(k) plans have safeguards in place to prevent excessive contributions. However, if you change jobs in the middle of the year or have access to multiple plans, you may end up saving too much in your 401(k) (k). If this occurs, you must request that any excess contributions be returned to you by April 15, including any earnings earned while the contributions were in your 401(k).

You should receive a modified W-2 form reflecting any excess contributions and earnings since they are regarded as taxable income and must be reported on your taxes.

5 Ways to Maximize Your 401(k) Contributions

Here are 5 ways in which you can maximize your contributions:

  1. Increase contributions each year: When you receive a raise, increase the amount you put into your 401(k) by the same amount. This will allow you to take advantage of compounding and maximize your retirement savings.
  2. Take advantage of employer matches: Most employers offer a matching contribution to 401(k)s. Take advantage of the free money your employer is offering.
  3. Contribute until you hit the maximum amount: The IRS sets an annual limit on the amount of money you can contribute to your 401(k). It is important to contribute as much as you can up to this limit each year.
  4. Take advantage of catch-up contributions: If you are age 50 or older, you can make additional catch-up contributions up to a certain limit each year. This can help you make up for lost time and maximize your 401(k) contributions.
  5. Trying to save 15% for retirement: That 15% may seem like a lot to save for retirement, especially if you're just starting out. However, keep in mind that 15% includes any percentage that your employer matches, and you can start small and work your way up to contribute more. This could imply increasing your 401(k) contribution rate by 1% each year or whenever you get a raise. And, if you receive a bonus or other unexpected windfall, consider allocating a portion of it to your retirement savings.

401(k) FAQs

Here are some of the commonly asked questions on 401(k):

Q: How much should you contribute to your 401(k)?

A: The amount you should contribute to your 401(k) depends on your financial goals, tax situation, and other factors. Generally, it is recommended that you contribute at least 10-15% of your income to your 401(k). However, you should speak with a financial advisor to determine the best contribution amount for your individual situation

Q: How much more can I put into my 401(k) in 2023 than in 2022?

A: The maximum contribution an employee may make to their 401(k) retirement plan for the tax year 2023 is $22,500. That amounts to $2,000 more than what you are permitted to give in 2022.

Q: How frequently does the IRS adjust 401(k) contribution limits?

A: The IRS typically adjusts contribution limits on an annual basis to account for the effects of inflation on the value of money.

Q: Is the IRS increasing catch-up amounts for 2023 as well?

A: Yes. Although the catch-up amount for those 50 and older was $6,500 in 2021 and 2022, the IRS increased it to $7,500 in 2023.


The Internal Revenue Service (IRS) updates the maximum amount that employees may put into their 401(k) plans each year. The amount for 2022 is $20,500, with a catch-up contribution of $6,500 for those aged 50 and up. Employees can contribute up to $27,000 in total.

In 2023, the maximum contribution amounts are $22,500 and $7,500, for a total of $30,000.

Make the most of your yearly opportunity to save for retirement by contributing the maximum amount possible. Furthermore, take advantage of employer-matching contributions, if available, to increase your retirement savings each year.

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Key Takeaways

  • Employees can contribute up to $20,500 in 2022 and $22,500 in 2023 to their 401(k) plan.
  • Anyone over the age of 50 is eligible for a catch-up contribution of $6,500 in 2022 and $7,500 in 2023.
  • For 2022, the general cap on total employer and employee contributions is $61,000 ($67,500 with catch-up).
  • For 2023, the general cap on total employer and employee contributions is $66,000 ($73,500 with catch-up).
  • The IRS adjusts retirement plan contribution limits for inflation each year.
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