What Are the Yearly Contribution Limits for a 401(k)?

What Are the Yearly Contribution Limits for a 401(k)?

For 2015, the yearly contribution limit for a 401(k) is $18,000 in salary deferrals plus an additional $6,000 if the employee is age 50 or older, according to the Internal Revenue Service. The total contribution limit for employee and employer contributions is $53,000.

However, total employee and employer contributions cannot exceed 100 percent of an employee's compensation even if it is under the maximum contribution limit, explains the IRS. If a 401(k) plan allows for matching contributions, the plan's match formula must be followed. The annual compensation limit for 2015 is $265,000. A 401(k) plan may specifically state that salary deferrals end once a participant's compensation reaches the annual compensation limit, although this is not common.