401(k) Contribution Limits for 2022 vs. 2023

If your employer offers a 401(k) plan, it can be one of the easiest and most effective ways to save for your retirement. But while a major advantage of 401(k) plans is that they let you put a portion of your pay automatically into your account, there are limits on how much you may contribute.

Each year, usually in October or November, the Internal Revenue Service (IRS) reviews and sometimes adjusts the maximum contribution limits for 401(k) plans, individual retirement accounts (IRAs), and other retirement savings vehicles. In October 2022, the IRS made updates for 2023.

Basic Limits

The basic employee contribution limit for 2023 is $22,500 ($20,500 for 2022). This limit includes all elective employee salary deferrals as well as any after-tax contributions made to a designated Roth account within your 401(k) or a Roth 401(k) plan. 

The same contribution limits apply to 403(b) plans and most 457 plans, as well as to the federal government’s Thrift Savings Plan.

If you have multiple 401(k) accounts, your total contributions to all of them—both traditional and Roth—cannot exceed that $20,500 limit. Any contributions you make to other types of retirement accounts, such as IRAs, do not affect your 401(k) contribution limit.

The employee contribution, as described above, is $22,500 for 2023. The catch-up contribution rises to $7,500 if you are over age 50. That's a total of $30,000.

For 2022, taxpayers could kick in an extra $6,500 catch-up contribution for a total of $27,000.

Employer Contributions

Another big benefit of participating in a 401(k) plan is that your employer may contribute to it on your behalf, as well. Many employers match employee contributions by adding, for example, 50 cents or $1 for every dollar the employee contributes.

Employers can also make elective contributions regardless of how much or little the employee contributes, up to certain limits. The limit on total employer and employee contributions for 2023 is $66,000. When you include the $7,500 catch-up contribution, that limit becomes $73,500.

The general limit on total employer and employee contributions for 2022 was $61,000 or 100% of employee compensation, whichever is less. For workers who are age 50 and up, the base limit is $67,500, which includes the $6,500 catch-up contribution.

Limits for Highly Paid Employees

If you earn a very high salary, you may be considered a highly compensated employee (HCE), subject to more stringent contribution limits. To prevent wealthier employees from benefiting unfairly from the tax benefits of 401(k) plans, the IRS uses the actual deferral percentage (ADP) test to ensure that employees of all compensation levels participate proportionately in their companies' plans.

If non-highly compensated employees (NHCEs) do not participate in the company plan, the amount that HCEs can contribute may be restricted.

Contributions in Excess of Annual Limits

Evaluating your estimated contributions for the year ahead and analyzing your contributions at the end of a calendar year can be very important. If you find that you have contributions in excess of the annual limits, the IRS requires notification by March 1 and excess deferrals should be returned to you by April 15.

Comparing 2022 and 2023 Limits

The chart below provides a breakdown of how the rules and limits for defined-contribution plans (401(k), 403(b), and most 457 plans) are changing for 2023 vs. 2022.

^{* The catch-up contribution limit for participants age 50 or older is available to those turning 50 at any time during the year. For instance, if you were born on New Year's Eve, it applies.}

The Bottom Line

Every year, the Internal Revenue Service (IRS) issues updates for the maximum amount of money that employees may contribute to their 401(k) plans. For 2023, that amount is $22,500, with a catch-up contribution of $7,500 for those aged 50 and over. For 2022, the same, maximum contribution amounts were $20,500 and $6,500.

Make the most of your yearly opportunity to save toward retirement by maxing out your contribution amounts, if possible. Moreover, be sure to take advantage of employer-matching contributions, if they're offered, to boost your retirement savings each year.