401k Contribution Limits 2023

Last Updated On June 23, 2023  

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Planning for retirement is essential for ensuring financial security in your golden years. One popular retirement savings option is a 401k account, since it's estimated that 70% of privately-employed American workers have access to one in their workplace.

However, it's crucial to understand the 401k contribution limits to make the most of this valuable tool. In this article, we'll delve into the intricacies of 401k contribution limits, strategies to optimize your contributions, and answers to common FAQs.

What Are 401k Contribution Limits?

401k contribution limits refer to the maximum amount of money an individual can contribute to their 401k account each year. These limits are set by the Internal Revenue Service (IRS) and may change annually to account for inflation. By adhering to these limits, you can enjoy tax advantages while building a substantial retirement nest egg.

However, there are also private limits for certain companies and individuals. Highly compensated individuals at certain companies may also face limits on how much they can contribute.

401k Contribution Limits For 2023

As of 2023, the 401k contribution limits remain as follows:

  • Elective Deferral Limit: The maximum amount you can contribute from your salary or wages as an elective deferral is $22,500.
  • Catch-Up Contributions: If you're 50 years old or older, you can make additional catch-up contributions of up to $7,500, bringing your total contribution limit to $30,000.
  • Combined Employer And Employee Contribution: $66,000 if you're under 50, or $73,500 if you're older than 50.

It's important to note that these limits apply to traditional 401k plans. If you have a Roth 401k, contributions are made after-tax, and the same contribution limits apply for elective contributions. Employer contributions are always made as "traditional" contributions. 

2023 401k Contribution Limits

Strategies to Maximize Your Contributions

  1. Take Advantage of Employer Matching: Many employers offer matching contributions up to a certain percentage of your salary. Make sure to contribute at least enough to maximize this matching benefit, as it's essentially free money.
  2. Spread Contributions Evenly: To ensure you maximize your contributions throughout the year, consider spreading them evenly over the course of 12 months. This way, you won't miss out on any employer matching contributions and can take full advantage of compound interest.
  3. Automate Contributions: Set up automatic deductions from your paycheck to contribute to your 401k. This ensures consistent contributions and helps you avoid the temptation to spend that money elsewhere.
  4. Contribute Bonuses and Windfalls: When you receive bonuses, inheritances, or other windfalls, consider putting a portion into your 401k. It's an excellent way to boost your retirement savings without impacting your regular budget.


Understanding the 401k contribution limits is crucial for maximizing your retirement savings. By staying within the limits and implementing smart strategies, such as taking advantage of employer matching, automating contributions, and leveraging bonuses, you can build a robust nest egg for your retirement.

Common FAQs about 401k Contribution Limits

1. What is the 2023 401k contribution limit?

The maximum amount you can contribute from your salary or wages as an elective deferral is $22,500 if you're under 50. If you're over 50, the maximum amount you can contribute is $30,000. The maximum combined contribution limit for both employer and employee contributions is $66,000 if you're under 50, or $73,500 if you're older than 50.

2. What happens if I exceed the 401k contribution limits?

If you exceed the 401k contribution limits, you may face penalties and tax consequences. The excess amount will be subject to additional taxes, and you'll need to withdraw the excess contributions before the tax filing deadline.

3. Can I contribute to both a 401k and an IRA?

Yes, you can contribute to both a 401k and an IRA. However, contribution limits apply separately to each account. In 2023, the maximum contribution limit for a Traditional or Roth IRA is $6,500 ($7,500 if you're 50 or older).

4. Can my employer contribute more than I do to my 401k?

While your employer can contribute to your 401k, they can't exceed the annual contribution limits. The combined total of your contributions and your employer's contributions cannot exceed $66,000 if you're under 50, or $73,500 if you're older than 50, or 100% of your salary, whichever is lower.

5. Are there income limits for contributing to a 401k?

No, there are no income limits for contributing to a traditional 401k. Regardless of your income level, you can contribute up to the maximum allowable limit set by the IRS.

6. Can I make additional contributions if I change jobs?

When changing jobs, you have several options for your 401k account. You can leave your funds in your previous employer's plan, roll them over into your new employer's plan, or transfer them into an individual retirement account (IRA). In any case, you can continue making contributions up to the annual limits based on your new employment.

7. Can I contribute to a 401k if I'm self-employed?

Yes, if you're self-employed, you have the option to open a solo 401k, also known as an individual 401k. As both the employer and employee, you can make contributions on behalf of your business and yourself, up to the annual limits set by the IRS.

About The Author Robert Farrington

Robert Farrington is the founder and editor-in-chief of Millennial Investor.

He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.

He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.

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