Yearly, the IRS units the utmost 401(okay) contribution limits based mostly on inflation (measured by CPI). There are literally a number of limits, together with an particular person contribution, an employer contribution, and an age 50+ catch-up contribution.
In case you’re at the moment working at an organization with a plan, we extremely counsel familiarizing your self with its mechanics and any matching funds. Contributing to your 401(okay) is a superb manner to assist set your self up for retirement.
What’s the 401(okay) contribution restrict in 2023?
The 2023 401(okay) particular person contribution restrict is $22,500, up from $20,500 in 2022. In 2023, employers and staff collectively can contribute as much as $66,000, up fairly a bit from a restrict of $61,000 in 2022.
In case you are 50 years outdated or older, you can too contribute as much as $7,500 in “catch-up” contributions on prime of your particular person and employer contributions.
Historic Contribution Limits for 401(okay) Plans, 1978 – 2023
| 12 months | Worker Contribution Restrict | Whole Contribution Restrict | Age 50+ Catchup Contribution |
| 2023 | $22,500.00 | $66,000.00 | $7,500.00 |
| 2022 | $20,500.00 | $61,000.00 | $6,500.00 |
| 2021 | $19,500.00 | $58,000.00 | $6,500.00 |
| 2020 | $19,500.00 | $57,000.00 | $6,500.00 |
| 2019 | $19,000.00 | $56,000.00 | $6,000.00 |
| 2018 | $18,500.00 | $55,000.00 | $6,000.00 |
| 2017 | $18,000.00 | $54,000.00 | $6,000.00 |
| 2016 | $18,000.00 | $53,000.00 | $6,000.00 |
| 2015 | $18,000.00 | $53,000.00 | $6,000.00 |
| 2014 | $17,500.00 | $52,000.00 | $5,500.00 |
| 2013 | $17,500.00 | $51,000.00 | $5,500.00 |
| 2012 | $17,000.00 | $50,000.00 | $5,500.00 |
| 2011 | $16,500.00 | $49,000.00 | $5,500.00 |
| 2010 | $16,500.00 | $49,000.00 | $5,500.00 |
| 2009 | $16,500.00 | $49,000.00 | $5,500.00 |
| 2008 | $15,500.00 | $46,000.00 | $5,000.00 |
| 2007 | $15,500.00 | $45,000.00 | $5,000.00 |
| 2006 | $15,000.00 | $44,000.00 | $5,000.00 |
| 2005 | $14,000.00 | $42,000.00 | $4,000.00 |
| 2004 | $13,000.00 | $41,000.00 | $3,000.00 |
| 2003 | $12,000.00 | $40,000.00 | $2,000.00 |
| 2002 | $11,000.00 | $40,000.00 | $1,000.00 |
| 2001 | $10,500.00 | $35,000.00 | |
| 2000 | $10,500.00 | $30,000.00 | |
| 1999 | $10,000.00 | $30,000.00 | |
| 1998 | $10,000.00 | $30,000.00 | |
| 1997 | $9,500.00 | $30,000.00 | |
| 1996 | $9,500.00 | $30,000.00 | |
| 1995 | $9,240.00 | $30,000.00 | |
| 1994 | $9,240.00 | $30,000.00 | |
| 1993 | $8,994.00 | $30,000.00 | |
| 1992 | $8,728.00 | $30,000.00 | |
| 1991 | $8,475.00 | $30,000.00 | |
| 1990 | $7,979.00 | $30,000.00 | |
| 1989 | $7,627.00 | $30,000.00 | |
| 1988 | $7,313.00 | $30,000.00 | |
| 1987 | $7,000.00 | $30,000.00 | |
| 1986 | $7,000.00 | $30,000.00 | |
| 1985 | $30,000.00 | $30,000.00 | |
| 1984 | $30,000.00 | $30,000.00 | |
| 1983 | $30,000.00 | $30,000.00 | |
| 1982 | $30,000.00 | $30,000.00 | |
| 1981 | $45,475.00 | $45,475.00 | |
| 1980 | $45,475.00 | $45,475.00 | |
| 1979 | $45,475.00 | $45,475.00 | |
| 1978 | $45,475.00 | $45,475.00 |
The 401(okay) was first launched in the USA within the Income Act of 1978, amending the Inner Income Code. It began gaining wider adoption in November of 1981 when the IRS proposed rules clarifying legitimate sources of revenue for 401(okay) contributions.
Key Dates within the Historical past of the 401(okay)
For an in depth historical past of the 401(okay), the Funding Firm Institute had a superb presentation again in 2006 which summarized the historical past behind the plan. Following are some key legal guidelines which formed the 401(okay) and different deferred compensation plans, and left us within the present state.
- 1978
The 401(okay) was first created within the Income Act of 1978 - November 1981
The IRS clarified the kinds of revenue that may very well be deferred right into a 401(okay) plan, stating common earned revenue certified and never simply revenue sharing revenue. - 1982
The Tax Fairness and Fiscal Accountability Act of 1982 lowered the utmost allowable contribution to the 401(okay) from all sources to $30,000 from $45,475. - 1986
The Tax Reform Act of 1986 lowered the quantity a person may contribute to a deferred compensation plan to $7,000, whereas leaving the general contribution alone at $30,000. - 2001
The Financial Progress and Tax Aid Reconciliation Act of 2001 elevated the contribution restrict above $30,000 for the primary time since 1981, and added the idea of “catchup” contributions for taxpayers 50 years outdated and older.
Different Historic Sources on the 401(okay) Restrict
Together with the glorious ICI presentation, we consulted a variety of further sources for this information:
In case you discover the 401(okay) restrict attention-grabbing, we even have an article detailing the historical past of the IRA Restrict. To mannequin potential 401(okay) development, see the 401(okay) calculator.