401(k) Contribution Limits For 2022
401(k) Contribution Limits For 2022

A workplace 401k contribution limits 2022 plan will help you save a lot of money each year for retirement, but there are limits to how much you and your employer can contribute each year. Contribution limits are the same whether you choose traditional 401(k) pre-tax credits or Roth 401(k) post-retirement tax-free income (or both). Let’s see how much you and your employer can contribute to your 401(k) this year.

401(k) Contribution Limits

In 2021, your personal 401(k) contribution limit is $19,500, or $26,000 if you’re 50 or older. In 2022, your 401(k) contribution limit is $20,500 for individuals, or $27,000 if you’re 50 or older.

2021 Limit 2022 Limit
Maximum Employee Contribution $19,500 $20,500
Catch-Up Contributions for those 50 or Older $6,500 $6,500

These individual limits are cumulative in a 401(k) plan. The cumulative total of your individual 401(k) contributions is limited to $19,500 if you leave for a new position in calendar year 2021, or $26,000 if you are 50 years of age or older, both plans in two positions All the above apply. Any 401(k) matched or unmatched contributions made to your account by your employer do not count toward your personal contribution limit.

You can also provide non-tax-exempt (and non-Roth) contributions on top of the employee contribution limit for traditional 401(k) contributions. About one-fifth of 401(k) plans allow employees to make this type of contribution, which remains within the 2021 401(k) plan’s maximum of $58,000 ($64,500 for those over 50) and $61,000 ($61,000) USD) maximum contribution. 2022 ($67,500 if you’re 50 or older).

Maximum 401(k) contribution limit

Many employers offer 401(k) matching reviews as part of their benefit plans. With a 401(k) match, your employer agrees to match a portion of your contributions to a percentage of your salary. In addition to matching contributions, some employers may choose to share a percentage of profits with their employees in the form of unmatched 401(k) contributions.

While your employer’s 401(k) matched and unmatched contributions don’t count toward your $19,500 ($26,000 if you’re 50 or older) deductible contribution limit, they are subject to a total contribution limit.

The employee’s and employer’s total 401(k) plan contributions cannot exceed $58,000 in 2021 and $61,000 in 2022. The catch-up contribution for employees 50 and older raises the cap to $64,500 in 2021, or a total of $67,500 in 2022. Total contributions cannot exceed 100% of the employee’s annual salary.


Total 401(k) employer and employee annual contribution limits

2021 2022
401(k) Employee & Employer Contributions $58,000 $61,000
Total with Catch-Up Contributions for those 50 or Older $64,500 $67,500

2018 data from Vanguard shows that 95% of employers in company-managed 401(k) plans have matched or unmatched contributions for their employees. About 85% of employers offer 401(k) matches to their employees. About 10% of employers make mismatched 401(k) contributions without requiring employees to contribute as well.

While annual limits on individual contributions are cumulative in a 401(k) plan, employer contribution limits are per plan. If you participate in more than one 401(k) plan in a calendar year (like our example above, when you leave your job and start a new one), each of your employers can maximize their contribution.

Traditional and Roth 401(k) Contribution Limits

Like an individual retirement account (IRA), a 401(k) can be used as both a traditional account and a Roth account. Both types have the same annual employee and employer contribution limits.

Traditional 401(k)s

With a traditional 401(k), you can deduct the total employee contribution amount from your taxable income each year. Broadly speaking, this means that if you made $50,000 and contributed $5,000 to your traditional 401(k), you would be taxed as if you made $45,000. When you retire or turn 59, you will pay income tax on your withdrawals based on your then-current marginal tax rate.

Roth 401(k)s

With a Roth 401(k), you can bring in money that has already been taxed. Withdrawals after age 59 are tax-free if at least five years have passed since the first deposit. However, Roth 401(k)s have some limitations:

• Not all employers offer Roth 401(k)s, although their popularity is rapidly increasing.

• If your company offers a 401(k) match, you cannot save it to your Roth account. Matched employer contributions are stored in a traditional 401(k) account.


• Unlike a Roth IRA, a Roth 401(k) has no income limits, which means that anyone with access to a Roth 401(k) can contribute.

401k contribution limits 2022 for high-paid employees

Some 401(k) plans have additional contribution limits for high-paid employees. (If your employer has a Safe Harbor 401(k) plan and you are a high earner, these restrictions may not apply to you.)

High-paid workers (HCEs) cannot contribute more than 2% of their wages to their 401(k), not the average contribution of non-high-paid workers. That is, if non-HCE employees contribute on average 5% of their salary, HCEs can contribute up to 7% of their salary. In addition to state limits, your company may have established specific caps to comply with regulations

The IRS determines you are an HCE if:

• You owned 5% or more of a business last year and participated in their 401(k) plan this year.

• Or, you earned $130,000 or more in 2020 from a company with which you participated in a 401(k) plan.


Unlike most other 401(k) restriction guidelines, HCE classification is based on your status from the previous year. For the 2022 program year, the employee compensation threshold is $135,000.

If the HCE contribution rate exceeds the non-HCE contribution rate by more than 2%, a business pension plan may lose its tax-advantaged status. As an HCE, you may not be able to contribute your 401(k) to the employee contribution cap due to low 401(k) participation rates. However, if you are eligible, you should still be able to make back payments on top of the HCE cap.

If you’re HCE-restricted but still want to pay more, consider funding a retirement account outside of your employer-sponsored plan, such as a retirement account. B. Traditional IRA.

What if you contribute too much to your 401(k)?

If your 401(k) contributions exceed the above limits, your excess contributions may be taxed twice: once as part of your taxable income for the year you contributed, and again when you opt out of a withdrawal plan . Income is still growing, tax deferred until you withdraw it.

If you discover that you are contributing too much to your 401(k), notify your human resources or payroll department and plan administrator immediately. In a normal year, you have until the tax filing deadline (usually April 15) to fix the problem and get your money back.

Excessive extensions to the 401(k) plan must be withdrawn and refunded to you. Your human resources or payroll department will need to adjust your W-2 to include the excess deferral in your taxable income. If the excess deferral generates income, you will get another tax return for the next tax year.

A 401(k) account can be a powerful tool for building retirement savings. Follow these tips to maximize your 401(k) benefits:

1. Set your contribution level to take advantage of your employer’s 401(k) compliance. If your business matches a certain percentage of your contribution, set your contribution level to make the most of the match. Otherwise you will leave your money on the table.

2. Start contributing to your 401k contribution limits 2022 today.

3. Benefit from fixed deposits. If you’re feeling overwhelmed by the investment possibilities of a 401(k) plan, choose a target date fund that aligns with your projected retirement year. Target date funds are optimized for your retirement, making them an excellent choice for beginners or more cautious investors.

4. Increase your 401(k) contribution percentage regularly. Increase your 401(k) tax rate by at least one percentage point each year. Small incremental increases will have little impact on your net salary and, over time, have a big impact on your retirement savings. Also, if you get a raise or bonus, put at least a portion of it into your savings.

5. Familiarize yourself with your employer’s 401(k) matching eligibility period. Your employer’s 401(k) matching positions may have a hold period. This means you’ll be with the company for a few years before you transfer the full value of your employer’s contributions to your 401(k) account. If you do not remain with the company until fully vested, you may lose some or all of the value of these matching contributions.

6. If you change jobs, turn your 401k contribution limits 2022 over. Every year, thousands of corporate pension plans are misplaced or forgotten by employees. If you like your current 401k contribution limits 2022, make sure you keep up with your credentials and check them regularly. If your plan charges you high fees when you leave the company, or you don’t like the investment option, move it to your next job’s retirement plan or IRA.

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