How much can I contribute to my 401(k) in 2023?
If you are under the age of 50, the maximum amount you can contribute (called an elective deferral) to your employer sponsored 401(k) plan is $22,500. This is an increase from the $20,500 you could contribute in 2022.
If you are age 50 or older you are eligible to contribute an extra $7,500 for a total of $30,000 in 2023. This is an increase from the $6,500 catch-up contribution for 2022.
Your employer can also make contributions to your 401(k) account through a match and/or profit sharing. This amount is in addition to the amount you contribute from your paycheck. The limit for the total amount that can be contributed to your 401(k) for 2023 from ALL sources is limited to 100% of employee compensation or $66,000 ($73,500 including catch-up contributions). This is an increase from the 2022 limit of $61,000 ($67,500 including catch-up contributions). You also may be able to make after-tax contributions into your 401k as well to get up to the limit. While they are not tax deductible, the gains in the account will be tax deferred. You should contact your benefits administrator or HR department if you have questions regarding your contribution limits.
Keep in mind that if you change jobs during the year that the limits apply across all plans, so you will want to assure that you keep track of your contributions so you don’t overcontribute.
Does contributing to my 401(k) affect how much I can contribute to an IRA?
No, the IRA contribution limits are separate from the 401(k) contribution limits and you may contribute to an IRA in addition to your 401(k). Check out our blog post HERE to learn more about IRA contribution limits.
What do I do with my 401(k) if I change employers?
You have several options for what to do with a 401(k) from a previous employer. Check out this blog post to learn your options and the pros and cons of each option.
ABOUT THE AUTHOR
Alicia Vande Ven
FINANCIAL ADVISOR, CANDIDATE FOR CFP® CERT.
Alicia Vande Ven, M.S., Candidate for CFP® Certification, is a fee-only, fiduciary financial advisor who works with clients locally in Madison, WI, and around the country.
You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost.