401k Contribution Limits for 2023

Key Points

  • Employers can funnel $22,500 to 401k savings in the 2023 tax year. This increases the 2022 contribution limit to $2,000.
  • In 2022, the contribution limit for an individual retirement plan (IRA) is $6,000.

You may be curious about how much money you could contribute each year to your 401k. The Internal Revenue Service (IRS), which sets annual limits, recently announced 2023 limits.

When you are trying to figure out how much of your salary to save for retirement, it can be difficult to budget. Contributing the maximum annual 401k amount can make a big difference to your nest egg.


Below we will compare the 401k contributions limits for 2022 versus 2023. We will also examine employer-employee maximum combinations contribution amounts and highly compensated employees contribution limits.

Limits on 401k contributions in 2023

Let's start with what are contribution limits. The contribution limits are the maximum amount that an employee can contribute in a 401k allowed by the Internal Revenue Service. The maximum contributions refers to the combined amount that both the employer and employee can contribute in a given year.

The 401k contribution limit has been increasing incrementally in the past. They were typically around $500 per year. The 401k contribution limit has increased by $2,000.

Let's look at the latest 401k contribution limits.

Limits on 401k contributions in 2023 and 2022

401k Plan Limits



Comparison between the Two Years
Maximum salary deferral limit $22,500 $20,500 $2,000
Workers 50+ eligible for catch-up contributions $7,500 $6,500 $1,000
Maximum contribution amount $66,000 $61,000 $5,000
Maximum contribution amount, including catch-up contribution $73,500 $67,500 $6,000

These amounts are also applicable to Thrift Savings Plans, 403(b), and most 457 plans.

The IRS usually announces the official limits for next year in late November or early December. For all the latest updates, you can visit the IRS website to view the IRS 401k contribution limit limits.

Limits on 401k contributions for employees and employers

The maximum amount of 401k contributions you can make is limited to employer matching contributions, employer match contributions, employer nonelective contributions, and elective deferrals. These are all defined below.

  • Elective Deferrals: These are amounts you can choose to transfer from your paycheck to your employer's retirement plan.
  • Employer Matching Contributions: Employer Matching Contributions refers to contributions that your employer makes to your retirement account, if you make a contribution from your salary. Here's a common 401k matching plan formula: 50c per dollar up to 6% employee's salary. You don't get any money if you don't take advantage of the match, so it is always beneficial to contribute enough to receive your full employer match.
  • Employer non-elective contributions: An employer who makes a contribution to an employee's retirement plan, regardless of whether the employee contributes, is considered employer nonelective.
  • Inheritance: Inheritance is a form of employer contributions that you can take with you if you are unable to fully vested in your plan. Vesting is when you are able to control the money in your plan. Your company has the right to take your money if you aren't fully vested or you quit your job.

The catch-up contribution limit can be applied from the beginning of the year until the end of that year, as long as your age is 50 at the time you begin saving. Let's suppose you turn 50 on December 31, 2022. You still have the opportunity to receive the catch-up contribution for the whole year.

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Highly Compensated Employees 401k Contribution Limits

High-paid employees have different limitations than those who are not highly compensated.

What is the definition of a "highly compensated employee" (HCE)? How does this affect your 401k contribution limits and contributions? The IRS considers you a highly compensated employee for purposes of 401k retirement plans.

You will need to adhere to stricter contribution limits. To ensure you contribute the correct amount to your company plan, take a look into the IRS tests.

Traditional vs. Roth Contribution Limits to 401k

Many employers offer both a Roth and traditional 401k. Let's look at the differences between these account types to help you decide which one may be best for you.

  • Roth401k:A Roth401k is an employer-sponsored savings program in which you can put after-tax dollars towards retirement. A Roth 401k investment has a perk. You don't have to pay taxes upfront. This means you won’t have to pay taxes on any withdrawals you make after you turn 59 1/2. As long as your account has been in existence for at least five consecutive years. Your earnings and contributions are tax-free.
  • Traditional401k A traditional 401k is an employer-sponsored plan which allows you to defer paying income taxes on retirement contributions.

Are you unsure if you should invest in one or both? If you aren't sure if your retirement income will be higher, you might consider a tax-diversified strategy. As long as your total employee contribution is not more than $20,500 in 2022 and $22,500 in 2023, you can contribute to both the Roth and traditional 401k plans.

What is the 401k contribution deadline?

What is the deadline for 401k contributions? The December 31st, 2022 is the deadline for 401k contributions.

The IRS will however allow you to make contributions to your IRA account up until the tax filing deadline for the following year, which is April 15, 2024.

The bottom line

You need to be aware of the 401k contribution limits to ensure you don't exceed them or contribute too little to reach your goals.

Personal finance, including your balance in 401k, is a personal decision. Personal Capital's average balance of 401k by age will help you see where you rank with your peers.

Experts recommend saving at least 20% of your salary to fund your long-term investments goals. Contributing at least to your employer's match is a smart idea. You have a greater chance of reaching your savings goals if you contribute more than your employer matches.

Continue reading What is 401k matching and how does it work?

Part of your financial plan should include planning for retirement. To get on the right path, you can start taking steps now.

  1. 65 Ways to Retire smart, a practical guide that includes insights from fiduciary financial advisers. This guide is completely free.
  2. Register for the Personal Capital Dashboard. These online financial tools are trusted and safe for millions of users. These tools allow you to view all your accounts, track your spending and plan for your long-term financial goals.
  3. Talk to a fiduciary advisor to get more information about your retirement savings strategies.

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The author is not a client at Personal Capital Advisors Corporation. He is paid as a freelancer.

This blog post contains general information and is not intended to be legal, tax, or accounting advice. No compensation exceeding $500. For your particular situation, you should speak to a qualified tax or legal professional. Remember that investing comes with risk. Your investment's value will fluctuate over time. You may lose or gain money. Personal Capital Advisors Corporation is a subsidiary owned by Personal Capital. Any reference to advisory services means that Personal Capital Advisors Corporation is referring to them. Personal Capital Advisors Corporation (SEC) is an investment advisor registered with the Securities and Exchange Commission. Registering does not imply any specific skill or training, nor does it imply endorsement of the SEC.


Frequently Asked Questions

What proportion of your portfolio should you have in precious metals

To answer this question, we must first understand what precious metals are. Precious metals refer to elements with a very high value relative other commodities. They are therefore very attractive for investment and trading. Gold is today the most popular precious metal.

There are many other precious metals, such as silver and platinum. While gold's price fluctuates during economic turmoil, it tends to remain relatively stable. It is also not affected by inflation and depression.

The general trend is for precious metals to increase in price with the overall market. But they don't always move in tandem with one another. The price of gold tends to rise when the economy is not doing well, but the prices of the other precious metals tends downwards. This is because investors expect lower rates of interest, which makes bonds less attractive investments.

In contrast, when the economy is strong, the opposite effect occurs. Investors want safe assets such Treasury Bonds and are less inclined to demand precious metals. Because they are rare, they become more pricey and lose value.

To maximize your profits when investing in precious metals, diversify across different precious metals. You should also diversify because precious metal prices can fluctuate and it is better to invest in multiple types of precious metals than in one.

What's the advantage of a Gold IRA?

The benefits of a gold IRA are many. It's an investment vehicle that lets you diversify your portfolio. You have control over how much money goes into each account.

You have the option of rolling over funds from other retirement account into a gold IRA. This allows you to easily transition if your retirement is early.

The best thing is that investing in gold IRAs doesn't require any special skills. They're readily available at almost all banks and brokerage firms. You do not need to worry about fees and penalties when you withdraw money.

That said, there are drawbacks too. The volatility of gold has been a hallmark of its history. So it's essential to understand why you're investing in gold. Are you looking for safety or growth? Are you looking for growth or insurance? Only then will you be able make informed decisions.

If you want to keep your gold IRA open for life, you might consider purchasing more than one ounce. You won't need to buy more than one ounce of gold to cover all your needs. You could need several ounces depending on what you plan to do with your gold.

A small amount is sufficient if you plan to sell your gold. Even one ounce is enough. But you won't be able to buy anything else with those funds.

How do you withdraw from an IRA that holds precious metals?

First, determine if you would like to withdraw money directly from an IRA. Make sure you have enough cash in your account to cover any fees, penalties, or charges that may be associated with withdrawing money from an IRA.

You should open a taxable brokerage account if you're willing to pay a penalty if you withdraw early. This option will require you to pay taxes on the amount that you withdraw.

Next, determine how much money you plan to withdraw from your IRA. This calculation will depend on many factors including your age at the time of withdrawal, how long the account has been in your possession, and whether you plan to continue contributing towards your retirement plan.

Once you have an idea of the amount of your total savings you wish to convert into cash you will need to decide what type of IRA you want. Traditional IRAs allow for you to withdraw funds without tax when you turn 59 1/2. Roth IRAs, on the other hand, charge income taxes upfront but you can access your earnings later and pay no additional taxes.

Once you have completed these calculations, you need to open your brokerage account. Many brokers offer signup bonuses or other promotions to encourage people to open accounts. However, a debit card is better than a card. This will save you unnecessary fees.

You will need a safe place to store your coins when you are ready to withdraw from your precious metal IRA. Some storage facilities will take bullion bars while others require you only to purchase individual coins. You will need to weigh each one before making a decision.

Bullion bars require less space, as they don't contain individual coins. You will need to count each coin individually. However, keeping individual coins in a separate place allows you to easily track their values.

Some people prefer to keep coins safe in a vault. Others prefer to place them in safe deposit boxes. Whatever method you choose to store your bullion, you should ensure it is safe and secure so you can enjoy its many benefits for many years.


  • You can only purchase gold bars at least 99.5% purity. (
  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (
  • If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (
  • Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (
  • The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (

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