What Are the Maximum 401k Contribution Limits?

Reach the max contribution to your 401k retirement plan.

Federal income taxes are a fact of life, but there are plenty of things you can do to minimize the tax bite — and a good place to start is with your employer-sponsored 401k plan. Not only do the investments in this type of retirement account grow tax-deferred, but all of the money you put into the plan — up to established 401k contribution limits — are made with pretax dollars, so more of your money is working for you.

Contribution limits for your 401k plan are determined by such factors as the year the contribution is made, the type of 401k plan in effect, your age and income, and in some cases your filing status. The Internal Revenue Service lists two limits that apply to your annual 401k contributions:

  1. The 401k limit on elective tax-deferred contributions is $18,000.
  2. Overall contributions to your 401k plan account — including your contributions and any contributions your employer makes — are limited to $54,000.

To better plan for your retirement, understand more about the maximum 401k contribution limits.

401k Contribution Limits

The deferred contribution limit for both 2016 and 2017 is $18,000 for traditional and safe harbor 401k plans, and $12,500 for SIMPLE 401k plans. The IRS notes that the contribution limits might increase in future years to account for changes to the cost of living. The government grants an additional catch-up contribution for plan participants who are at least 50 years old by the end of the calendar year. Those with a traditional or safe harbor 401k can contribute up to an additional $6,000, and those with a SIMPLE 401k can contribute an additional $3,000 for the 2016 and 2017 tax years.

If you’re fortunate enough to participate in a 401k plan that includes employer contributions, your retirement savings can increase dramatically, but there are limits to the total amount that can be contributed to your plan. The most that can go into your 401k plan for the 2016 tax year is the lessor of 100 percent of your compensation, or $53,000. That amount increased to $54,000 for the 2017 tax year, which doesn’t include catch-up contributions for those who are eligible.

Find the maximum 401k contribution limits at a glance in the following tables:

401k Maximum Contribution Limits
401k Plan Limits 20172016
401k Elective Deferrals$18,000$18,000
Annual Defined Contribution Limit$54,000$53,000
Annual Compensation Limit$270,000$265,000
Catch-Up Future Contribution Limit$6,000$6,000

 

SIMPLE 401k Plan Limits
SIMPLE Employee Deferrals$12,500$12,500
Annual Defined Contribution Limit$12,500 + up to 3% of employee compensation, typically capped at $270,000$12,500 + up to 3% of employee compensation, typically capped at $265,000
SIMPLE Catch-Up Deferral$3,000$3,000

How to Get the Saver’s Tax Credit

If you need another incentive to help you learn how to save for retirement, consider the retirement savings contribution credit, commonly referred to as the saver’s credit. Depending on your income and filing status, you could be eligible for a tax credit of up to 50 percent, 20 percent, or 10 percent of the contributions you make to your retirement plan or IRA — up to $2,000, or $4,000 if married filing jointly. It’s almost like getting free money for something you’re already doing.

See the following table to find details on the saver’s credit at a glance.

2017 Saver’s Credit
Credit RateMarried Filing JointlyHead of HouseholdAll Other Filers 
50% of your contributionAdjusted gross income not more than $37,000Adjusted gross income not more than $27,750Adjusted gross income not more than $18,500
20% of your contribution$37,001-$40,000$27,751-$30,000$18,501-$20,000
10% of your contribution$40,001-$62,000$30,001-$46,500$20,001-$31,000
0% of your contributionMore than $62,000More than $46,500More than $31,00

Up Next: IRA vs. 401k — 7 Tips for Choosing the Best Retirement Plan

  • Mark

    There really isn’t a good reason to put in more than the minimum to get the maximum match from your employer. Invest in other hard assets with the remaining money post tax. Gov’t can’t take those away or manipulate those away.