Contribution limits: Is there a maximum amount I can put in my 401(k) plan?

Yes, like most tax-advantaged retirement accounts, 401(k) plans come with annual contribution limits. These limits are set by the IRS and can change each year based on inflation and other factors. Whether you're contributing to a traditional or Roth 401(k), there’s a cap on how much you can contribute in a given year.

The maximum allowable 401(k) contribution includes elective deferrals made by the employee and, in some cases, after-tax contributions. Understanding these limits is important to make the most of your retirement savings plan while avoiding penalties or excess contributions. The IRS sets the standard 401(k) contribution limits each year, and some participants, especially those over 50, may be eligible to make catch-up contributions on top of the regular limit.

Understanding the 401(k) contribution limits is important for maximizing your retirement savings while following IRS regulations. The IRS sets annual contribution limits for 401(k) plans to ensure fair and tax-compliant retirement savings. These limits are split into two key parts: elective deferrals, which are the amounts you choose to contribute from your paycheck, and employer contributions, which may come in the form of matches or other contributions from your employer. Together, they make up your total annual 401(k) contributions.

Here’s an overview of the 401(k) contribution limits for 2025, depending on your age and employment situation:¹

If you're 50 or older, you're allowed to make additional 401(k) contributions on top of the standard yearly limit. These are called catch-up contributions. This IRS rule is meant to help workers who are closer to retirement maximize their 401(k) savings before they stop working. You qualify for catch-up contributions starting in the year you turn 50, regardless of your exact birthday. These extra contributions are voluntary, but they can make a big difference in your overall retirement balance — especially if you've had years with lower savings.

The 401(k) max for employee contributions in 2025 is $23,500. If you're over 50, you can contribute an additional $7,500, raising the maximum yearly contribution to 401(k) plans to $31,000 on the employee side alone. For individuals aged 60 to 63, the SECURE 2.0 Act introduces an enhanced catch-up contribution limit for 401(k) plans, allowing for greater retirement savings during these years.¹

Employer contributions do not count toward the employee deferral limit but they do count toward the overall annual 401(k) contribution limit, which includes all contributions made to your account in a given year.

In 2025, the 401(k) max for employee elective deferrals is $23,500. That’s the max amount you can put in a 401(k) from your paycheck, not including employer contributions. However, the IRS also sets a total limit — known as the annual additions limit — which caps the combined total of employee and employer contributions.

Here’s how it breaks down:

• Employee elective deferral limit: $23,500

• Total combined limit (employee + employer): $70,000

• With catch-up (age 50+): $77,500

• With enhanced catch-up (ages 60–63): $81,250

That means your employer can contribute up to the difference between what you put in and the total allowable amount. This can include:²

• Matching contributions: The employer matches a portion of the employee’s contributions, typically based on a set percentage of salary or amount contributed.

• Non-elective contributions: The employer contributes a fixed amount to every eligible employee’s 401(k) plan, regardless of whether the employee contributes.

• Profit-sharing contributions: The employer may contribute discretionary amounts to employees’ 401(k) accounts based on company profits, even if no employee contributions are made.

Important to know: Employer contributions are not included in your taxable compensation and are not taxed in the year they’re made, but they do grow tax-deferred in your 401(k) plan.

401(k) contributions aren’t technically tax-deductible, but they do help lower your taxable income, which can reduce how much you owe in taxes for the year. This makes them a valuable tool for long-term savings with short-term tax benefits.

With a traditional 401(k), contributions are taken from your paycheck before taxes, so your taxable income is lower today, though you’ll owe taxes when you withdraw the money in retirement. In a Roth 401(k), contributions are made after taxes, so there’s no upfront tax benefit, but qualified withdrawals later on, including investment growth, are completely tax-free.

Before deciding how much to set aside for retirement, it’s important to understand the rules that apply to your 401(k) contribution. These rules determine the max amount you can contribute to a 401(k) each year, how different types of contributions are treated for tax purposes, and what happens if you accidentally exceed the limit.

Whether you're in a Roth or traditional 401(k) plan, contributing to more than one account, or receiving employer contributions, there are specific IRS guidelines that govern how and when you can contribute. Knowing the difference between elective deferrals, after-tax contributions, and the role of your compensation can help you avoid penalties and stay within the current 401(k) contribution limits.

When it comes to contribution limits, Roth and traditional 401(k) plans are treated the same by the IRS. For 2025, the maximum amount you can contribute to a 401(k), whether it's Roth, traditional, or a combination of both is $23,500. If you're 50 or older, you can make an additional catch-up contribution of $7,500, bringing your total possible contribution to $31,000. It's important to note that this limit applies collectively to both types of accounts. You can't contribute $23,500 to a traditional 401(k) and another $23,500 to a Roth 401(k). The combined total must not exceed the annual limit.

If you contribute more than the maximum allowable 401(k) contribution, the extra amount is considered an excess deferral by the IRS and it needs to be corrected. It can happen if you contribute to more than one 401(k) plan in a year or simply miscalculate your elective deferrals.

Here's a breakdown of how over-contributions can occur, the associated penalties, and the steps to rectify them:³

Having more than one 401(k) plan in the same year, for example, after changing jobs, can make it easier to accidentally exceed the annual 401(k) contribution limits. Even though each employer may allow you to contribute up to the full limit, the IRS treats your total elective deferrals across all plans as one combined amount.

In 2025, the max you can contribute to a 401(k) — across all plans — is $23,500 (plus catch-up, if eligible). Exceeding this amount can result in tax penalties unless the surplus is corrected by the deadline. If you contribute to multiple 401(k) plans in a single year, it’s your responsibility to track your total contributions. The IRS does not monitor this for you, so keeping a personal record is important to staying within the rules.

If you're looking to get the most out of your 401(k), there are a few strategies to consider. These won’t apply to everyone, but they can make a meaningful difference in your long-term retirement savings.

These are some of the key factors that can play a role when aiming to reach the maximum allowable 401(k) contribution:

• Annual elective deferral limit: For 2025, the maximum yearly contribution to a 401(k) from salary deferrals is $23,500.

• Catch-up contributions: Individuals aged 50 or older may be eligible to contribute an additional $7,500, increasing their total employee contribution to $31,000.

• Employer contributions: Depending on the plan, companies may offer 401(k) matching or profit-sharing contributions. These count toward the overall 401(k) limit of $70,000 in 2025.

• After-tax contributions: Some plans allow after-tax deferrals beyond the standard limit, provided the total contributions from all sources remain within IRS limits.

• Contribution adjustments: Contribution amounts can be adjusted during the year in many plans. Changes in income, employment, or eligibility may affect total deferrals.

There are additional ways to save money once you’ve reached your 401(k) contribution limit or want more flexibility outside of retirement accounts. With Raisin, you can access a variety of high-yield savings accounts, all managed through one easy-to-use platform. These options can help you continue building savings beyond tax-advantaged plans while keeping your finances organized in a single place.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Sources

¹https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000

²https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-overview

³https://www.irs.gov/retirement-plans/consequences-to-a-participant-who-makes-excess-deferrals-to-a-401k-plan