What Is the Maximum 401(k) Contribution Per Year?


Quick Answer

During the 2016 tax year, most employees can contribute a maximum of $18,000 to a 401(k) plan, reports the IRS. Employees aged 50 and over may be able to make an additional catch-up contribution of up to $6,000. The tax year 2016 limits are unchanged from tax year 2015.

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Full Answer

Employees can contribute pre-tax income toward their retirement with 401(k) plans, explains Forbes. The main advantages of the plans are the ability to defer taxes until retirement, when they may be in a lower tax bracket, and the ability to accelerate savings by receiving matching contributions from an employer.

The maximum 401(k) contribution and the maximum catch-up contribution each increased by $500 between 2014 and 2015, according to the IRS. The IRS typically announces the yearly 401(k) contribution limits each October.

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