401K Contribution Limits 2023: Up to $66,000 Increase Compared Last Year

One of the bonuses that most employers need to offer their newly hired workers is the 401(k) retirement plan. The amount of 401(k) a worker receives when they retire depends on the employer. However, the Internal Revenue Service (IRS) has established a maximum amount that an employer can contribute every year.

An article on MARCA states that in 2022, the maximum amount that can be contributed to a Roth 401(k) and the pretax contributions that can be added to a traditional 401(k) was worth $20,500. In addition, individuals who are 50 or older were able to contribute an additional of $6,500 only. No one can contribute an unlimited amount of 401K Contribution Limits 2023 because the IRS made rules that must be followed.

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Changes in 401K Contribution Limits 2023

According to Hagen, back in 2022, individuals who contribute to the 401(k) program have a limit for employee contributions of up to $20,500 only. However, this year, the 401K Contribution Limits 2023 has increased by $2,000 which makes the limit up to $22,500. The limit to combined employer and employee contributions have also increased up to $66,000.

Furthermore, individuals who are 50 or older will be eligible for an increase in employee contribution limit of up to $30,000. They will also be eligible for an additional $7,500 in catch-up contributions. Based on an individual’s plan, they may also be eligible to contribute post-taxes that are beyond the pretax and Roth limit.

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