Celebrating Over 14 Years of Excellent Service
Call Today : (866) 639-0066
Call Today :
(866) 639-0066
Celebrating Over 14 Years of Excellent Service

401k Contribution Limits

For employee-sponsored retirement accounts, the maximum amount of money that can be contributed by employees and employers is limited by the IRS. While contribution elections are often defined as a percentage of the entire salary, these are strict limitations, and the maximum limits apply regardless of your entire income.

Even if you earn $600,000 a year and want to contribute a small amount, say 5% to your 401K, the IRS’s contribution limits will restrict the maximum amount you can contribute to that particular plan.

In the example above, since the figure you chose to contribute would work out to $30,000 annually, you will probably have to reduce the percentage you contribute every month to remain within the contribution limits for your 401K plan.

Catch-Up Contributions

Youngsters with plenty of time before they retire can still make do, but if you’re already nearing retirement, you’ll need to add as much as you can to your nest-egg. Fortunately, the IRS allows participants closer to retirement to contribute a higher dollar-value ‘catch-up’ amount, so they can save more for the time when they are retired.

Here’s a table with 401K contribution limits for the last 6 years (in accordance with IRC section 415, the limits are adjusted annually if needed, to accommodate for increases in cost of living):

401K LIMITS201820172016201520142013
Elective Deferrals for 401(k)$18,500$18,000$18,000$18,000 $17,500 $17,500
Defined Contribution Limits (Annual)$55,000$54,000$53,000$53,000 $52,000 $51,000
Compensation Limits (Annual)$275,000$270,000$265,000$265,000 $260,000 $255,000
Limits for Catch-Up Contribution$6,000$6,000$6,000$6,000 $5,500 $5,500
Limits for Highly Compensated Employees$120,000 $120,000 $120,000 $120,000 $115,000 $115,000
Elective Deferrals for 403(b)/457 $18,500$18,000 $18,000 $18,000 $17,500 $17,500
Employee Deferrals (SIMPLE)$12,500 $12,500 $12,500 $12,500 $12,000 $12,000
Catch-Up Deferral (SIMPLE)$3,000 $3,000 $3,000 $3,000 $2,500 $2,500
Minimum Compensation (SEP)$600 $600 $600 $600 $550 $550
Compensation Limit (SEP/Annual)$275,000 $270,000 $265,000 $265,000 $260,000 $255,000
Wage Base (Social Security)$128,400 $127,200 $118,500 $118,500 $117,000 $113,700