Everybody must have a solid retirement plan such as the 401(k), which is one of the perks most employers need to offer when they hire new workers. Depending on the company, the 401(k) amount you get when you retire varies. But there is a maximum set by the Internal Revenue Service (IRS) that your employer can contibute each year. During 2022, the most you could contribute to a Roth 401(k) and add in pretax contributions to a traditional 401(k) was $20,500. This number has risen for 2023, which makes retirement life a little easier because folks will have more money to enjoy their years in retirement.
People who are 50 and older were able to contribute an additional $6,500 in 2022 but that number also changed for 2023. This modification does help you save a little more in the 401(k) every single year. Folks are not able to contribute an unlimited amount because the IRS set a clear path of rules that everybody must follow. Even employers need to follow those rules in order to have an organized program. Those limits that changed for 2023 are not significant at first sight but they will be once people who retire get to see the benefits of their contributions to the 401(k) program.
401(k) contributions limits for 2023
People who contribute to the 401(k) program will now be able to set their limit up by a total of $2,000. Back in 2022, the limit for only employee contributions was $20,500 and now it will be $22,500. Combined employee and employer contributions shot up to $66,000 in 2023. Also, people who are 50 or older will become eligible for an additional $7,500 in catch-up contributions and rise your employee contribution limit to $30,000. It will all depend on your specific plan but you will be able to make post-tax contributions beyound the pretax and Roth contribution limit. Total contributions won’t be able to exceed your annual compensation at the company that has your plan.
