401(k) Contribution Limits: 2022 and 2023 - NerdWallet (2024)

Contributing enough to your 401(k) plan to meet your employer's match is an easy way to save for retirement, but that doesn't mean you can't contribute more. When planning how much to contribute to your 401(k) plan, keep in mind that the IRS sets a limit on how much you can add to your 401(k) plan every year, and exceeding that could result in extra tax penalties if not addressed.

401(k) contribution limits in 2022

For 2022, total 401(k) contributions from both an employee and their employer cannot exceed $61,000 or 100% of the employee's compensation, whichever is less.

401(k) contribution limits in 2023

The IRS regularly reviews maximum 401(k) contributions to account for inflation and cost-of-living changes. For 2023, your total 401(k) contributions — from yourself and your employer — cannot exceed the lesser of $66,000 or 100% of your compensation.

» Crunch the numbers: Use our free 401(k) calculator to see if you're saving enough for retirement.

Does my employer match count toward 401(k) limits?

If your employer offers a match for 401(k) contributions, the good news is that those contributions don't count toward your individual limit. However, the total of your contributions and theirs can't exceed the combined limit as set out by the IRS.

Can I max out both my 401(k) and Roth 401(k)?

If you have both a 401(k) plan and Roth 401(k) plan, you can contribute to both every year as long as the total contributions don't exceed the IRS limit for the year. For 2023, the limit is $22,50. If you’re choosing between the two, learn about the differences between a Roth and traditional 401(k).

Are there income limits for 401(k)s?

While there's no universal income limit on 401(k) contributions, in some cases the IRS does impose contribution limits on "highly compensated employees" when a company encounters disproportionate contribution levels among its workers. The IRS has a test that helps employers who sponsor 401(k) plans to assess whether employees are participating in their plan at levels proportionate to their compensation.

If the test determines that people across compensation levels aren't participating in a manner the IRS deems proportionate, employee contribution levels for highly compensated employees can be lowered. In these cases, your employer may need to return some of your excess contributions.

The IRS defines a highly compensated employee in one of two ways:

Can I have a 401(k) and an IRA?

Yes. You can have both a 401(k) and an IRA. IRAs make a great supplement to retirement savings, especially if you’re contributing enough to receive a full match from your employer, or you’re planning on maxing out your 401(k). The annual contribution limit for an IRA in 2022 is $6,000; $7,000 for those 50 and up. In 2023, the IRA contribution limit rises to $6,500, or $7,500 if you’re 50 or older. And you can make contributions to an IRA for 2022 until April 18, 2023.

What happens if I exceed my 401(k) limit by mistake?

If you contribute too much to your 401(k) and notice your mistake before the tax filing deadline, you can probably correct it with your employer. You’ll need to notify your plan administrator. They’ll return the excess money to you, and you’ll get a new W-2 and pay taxes on your new total taxable wages.

If you don’t catch the mistake before tax day, you may have to pay taxes twice on the amount you contributed over the limit. That’s because the excess contribution can’t be deducted from your taxes in the year it was made, and because the IRS will still count that money as taxable when it’s distributed, too.