Max 401k Contribution Limits

How much money would you like to save for your retirement? More money sounds always better, right? Yes, I hear you. However, if you want to contribute money to the 401k plan you also need to know some of the basic 401k rules. And those rules contain also 401k contribution limits!

Let’s have a closer look and let’s dive into the 401k contribution rules made by our government.

What are the 401k annual contribution limits?

  • For who do they apply for?
  • And how do the contribution limits apply to your personal contribution and the one from your employer?

Find below a simple example, that shows how the maximum 401k contribution can be calculated. And yes, please also find our 401k Contribution Calculator and use them to calculate your personal maximum annual 401k contribution!

The 401k Contribution Limit

401k Contribution Limits
401k Contribution Limits

How much can an employee contribute to a 401k?

At this time (December 2018) we do have an annual 18k limit on contributions to the 401k. However, this limit is just for the employee.

That  means, if the employer wants to match 100% of it, then the total maximum amount would be 36k.

What’s the max 401k contribution, what are  your personal 401k limits and how does this effect the employers 401k matching amount? Let’s have a look at a real example.

Max amount for 401k: Your annual maximum 401k contribution is limited with 18k ($18.000,–) – no matter how much your annual income is!

That means, $18.000,– can be contributed directly from your gross income. And that’s just your personal contribution and does not include the employers match.

401k Contribution Example with Charly

Charly has an annual 55k income. He decided to contribute 6% of his gross income to his 401(k) plan.

Therefore, $3300,– is his personal annual 401k contribution. His employer matches the full amount and also contributes another $3300,–.

Charly did not reach the 401k max annual amount of $18k and is within his 401 k limits.

401k Contribution Example with George

George has an annual income of 400k. He also wants to contribute 6% of his gross income to this 401k plan.

Making the math, he is told that his 6% of his gross annual income is $24.000,–. His employer is also willing to match his contribution and is willing to pay another $24k to his 401k plan.

However, since George’s personal contribution is already higher than the annual 401k max contribution allowed (annual 18k), he can not contribute 6% of his annual gross income.

George is already reaching the 401k annual limit of $18.000,–. That’s the maximum amount he can contribute per year.

Maximum 401k Contribution


How much 401k money can I invest?

At this time, with December 2018, you can put an annual total amount of $18k into the 401k plan. That’s the maximum total annual amount you personally can pay.

Remember, this is your personal contribution. And yes, that’s at the same time the maximum annual total amount that will be accepted for both plans together.

The employer can match this amount. For example, if you are lucky, and your employer would match your contribution with 100%, the total annual contribution would be 36k.

401k Contribution Mix

Do I have to chose between the two plans, or can I also mix my contributions?

You can chose to put all your money into the Traditional 401k.  But you can also chose to invest all your money into the Roth 401k plan. And yes, believe it or not.

There is even a third option. You can also mix both 401k plans, and use both plans at the same time!

According to the IRS: You can split your annual elective deferrals between designated Roth contributions and traditional pre-tax contributions, but your combined contributions cannot exceed the deferral limit – $19,000 in 2019 and $18,500 in 2018 ($25,000 in 2019 and $24,500 in 2018 if you’re eligible for catch-up contributions)

Let me give you an example:
You can contribute a total of $18k into the Traditional 401k plan. Therefore, you maxed out your annual total contribution. You could also contribute an annual total amount of $18k using the 401k Roth plan.

Or you could mix your contributions and put for example $4k into the Traditional 401k plan, and $14k into the ROTH 401k plan.

Read in my next chapter how to minimize your losses when considering 401k Withdrawal.

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