2021 vs 2022 401(k) Employee and Employer Contribution Limits and Catch-up Amounts

[Updated for latest limits] I recently received a few questions regarding 401k retirement plans and contribution limits. The first thing to understand is that there are two main types of contributions that go into these plans. One is your (as a worker or employee) contribution, or elective deferral, and the other is your employers, or maximum matching contribution.

Secondly there are four annual contribution limits you need to be aware of : Your employee contribution (elective deferral) limit, catch-up contribution limits (for those over 50), employer contribution limits and maximum annual contribution limits. These are set by the IRS every year based on cost of living adjustments.

Per the updated table below the maximum employee (elective deferral) annual contribution limit across all 401k and 403b plans was $19,500 in 2021. This has officially increased to $20,500 in 2022 per the IRS.

The maximum annual contribution for 2021 rose to $58,000 and will rise to $61,000 is the projected 2022. This includes elective deferrals, employer matching and discretionary contributions, but excludes catch-up contributions for those over 50.

The catch-up contribution for those over 50 remained unchanged at $6,500 in 2021 and 2022. In addition, the amount of employee compensation (especially for higher income earners) that can be taken into account when determining employer and employee contributions rises from $290,000 in 2021 to $305,000 in 2022.

401K Contribution Limit
Maximum Employer Contribution
Max. for ALL Contributions (excl. Catch-up)
Additional Catch-up Amount (age > 50)

Click here for the full set of 401K, Roth IRA and Traditional IRA Contribution Limits

Maximum Employer contribution limits. Matching 401K or 403b contributions made by your employer are not counted towards your annual contribution limit or 100% of your salary, whichever is the smaller amount. But do count towards the maximum annual contribution limit that includes employee and employer contributions.  Though most employers rarely give anywhere near the maximum, most generally match 3% to 6% of employee contributions.

Catch-up contributions. If you are age 50 or over at the end of the calendar year, you are permitted to make additional, “catch-up”, elective deferral contributions. These catch-up contributions are not subject to the annual general limits that apply to 401k plans. The catch-up contribution you can make for a year cannot exceed the lesser of the annual catch-up contribution limit, or the excess of your compensation over the elective deferrals that are not catch-up contributions.

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48 thoughts on “2021 vs 2022 401(k) Employee and Employer Contribution Limits and Catch-up Amounts”

  1. If I reach the max annual contribution limit am I still able to add more by borrowing against my 401K & paying interest to myself?

  2. Hi – Not sure how old this thread is, but hoping you can answer a question that is confusing the heck out of me! So, I understand the contribution limits for employee and employer….for 2017 it is $18.000 for the employee and an additional $36,000 for the employer to make a grand total of $54,000. My employer contributes 100% match to my contribution for the first 1% of my salary (therefore 1% so far) and then a 50% match to my contribution for the next 5% I contribute …(so an additional 2.5%) – meaning that I need to contribute 6% of my salary to get all of his potential match of 3.5%…However, I earn a large bonus in the second month of the year (February) which maxes out my contribution of $18,000 right away….(I actually contribute 20% of my salary and bonus to the 401K…). Once I have maxed out at $18,000 in February I no longer receive the employer match….is this right? Seems like I’m doing something wrong here?

    • Check your stub…usually employer will match each pay period (every 2 weeks / twice a month / etc.) based on their committed level on an “Annual” contribution amount (your situation appears 3.5% of gross earning match paid each pay period). (advise checking with payroll) You max out in Feb but the company continues to match the 3.5% each pay period (I hit limits early but company continues to deposit into 401K their commitment levels each payday even though I have nothing come out after I hit IRS limit). I see how you apply the logic but I believe when you max, company continues to pay at their 3.5% for the remainder of the year.

    • That is correct. The problem here that is most automated payroll systems will issue a matching contribution only if there is employee contribution present. Therefore, you are putting yourself at disadvantage, if you are trying to max out your 401K before the end of the year. If you get bonuses, and know how much deduction was taken, you should be adjusting the percentages of deduction from your future check to get full amount of matching contribution.

  3. My employer requires that I contribute 7.5% each pay period. They then match the 7.5%. I know the employer match doesn’t count toward the $18000 elective deferred contribution.

    My question is: does the 7.5% that i am forced to contribute as an employee count toward the elective deferred contribution limit of $18000? I’ve been told that it does because it is still am employee contribution. But I’ve also been told that it doesn’t because it is not a voluntary “elective” employee contributions because it is a requirement for employment at my company.

    Can anyone clear up the confusion?

    • By law, you can NOT be forced to participate. While your employer may automatically enroll you into their 401k plan, you can elect to opt-out by filling out the appropriate paperwork. 401k plans are elective plans by definition and you can not be forced to participate. Any money that goes into your account out of your paycheck will count against the contribution limit.

  4. Hi,
    Here is my case.
    I worked for employer “A” for few months and contributed to 401K plan from my salary. After leaving that position, i moved that 401k amount (1K) into my traditional IRA.

    My current employer ‘B” has a 401K plan and i am contributing in it. But they allow only 50% of salary/pay period to go into 401K plan, I will not meet the 18K mark to get max tax benefit with this situation.

    Is there a way to get max tax benefit?


    • You are constrained by your plan rules. With company B, you will simply not be able to reach the contribution limit, but only reach the max your plan allows: 50% of your salary. Also, keep in mind for any year that you work for two companies, the amount you defer into your 401k plan at each company must be added together and combined, you can not exceed the contribution limit. For example, in a calendar year, you can’t contribute 15k at Company A, and then another 15K at Company B. That excess contribution will cause you to be penalized 6% of the excess, and you’ll also need to have the excess returned to you.

  5. My annual compensation is $250.000.00. I have a company pension and a company 401k; can I contribute $18.000.00 into my 401k and 5.500.00 into a IRA. Thank You

  6. Andy, do catch-up contributions count when comparing to 100% compensation? e.g. I have a solo 401K and if I pay myself 26K for the year, am I able to defer 18K + 6K catch-up and have my company match 25% for a total 401K value of 18K+6K+6.5K = 30.5K? If the catch-up isn’t counted then only the 18K+6.5K = 24.5K should be compared to 26K comp, right?

    • Matching 401K or 403b contributions made by your employer are not counted towards your annual contribution limit or 100% of your salary, whichever is the smaller amount. So you should be comparing to the 26K comp as stated. I would talk a registered tax agent of CFP however because small business and solo 401K may have some other constraints around wages etc.

  7. Andy,

    Could I have an employer put $5,000 in my 401k without putting any money in myself or does it always have to be a “matching” contribution?

    Thanks for your time.

    • An employer can put in whatever they want for you (some do as part of an employment package) but generally I have seen it be a matching contribution so as to not have to give it all employees.

      Here is the official word from the IRS on employer contributions

      Employer matching contributions. If the plan document permits, the employer can make matching contributions for an employee who contributes elective deferrals (for example, 50 cents for each dollar deferred). Employer matching contributions can be discretionary (contributed in some years and not in others, depending on the company’s decision) or mandatory, as in SIMPLE plans and Safe Harbor 401(k) plans.

      Employer discretionary or nonelective contributions. If the plan document permits, the employer can make contributions other than matching contributions for participants. These contributions are made on behalf of all employees who are plan participants, including participants who choose not to contribute elective deferrals.

    • My employer just sent a memo concerining my 401 contributions that they will be doing away with bi-weekly limit. what does this mean

  8. Andy (or any one),
    I am not sure how old is this thread but I am just hoping to still get a response. I have currently started with a new employer and I have 5 more pay periods before the end of the year. My current contribution to the previous employer is around 8K (year 2015) and my new employer allows a match of 0.5 till 6% of my salary. If I contribute 20% of my salary each pay period, is my employer going to match up 10% each pay period until it reaches the max 6% of my salary or the 6% if every pay period (bi-weekly) ?

    I thank you in advance!

    • You should check with HR/Payroll at your employer. But generally your employer will only contribute up to the max 6% of your pro-rated salary. So for example if you have about $10,000 of earnings left to make for the year, your employer will contribute a maximum of $600, even if you contribute 20% ($2,000).

  9. Hi, I have a question regarding Company Contributions to a 401K. I IRS states that 100% of compensation can be used in a calculation to determine contribution limits, of course, up to 2015’s $53,000 limit from all sources. I am ignoring catch-up contributions here.

    Therefore, this implies that the company can take a worker who makes, say, $65,000 per year, and, assuming that the employee doesn’t save anything from elective deferrals, contribute $53,000 into the employee’s 401K as a discretionary or profit sharing contribution.

    Or assuming that the employee contributes $18,000 in elective deferral, then the company could contribute $35,000, for a total contribution of $53,000, correct?

    The IRS states it clearly:


    Below is from the IRS link above…
    Overall limit on contributions
    Total annual contributions (annual additions) to all of your accounts in plans maintained by one employer (and any related employer) are limited. The limit applies to the total of:
    •elective deferrals
    •employer matching contributions
    •employer nonelective contributions
    •allocations of forfeitures
    The annual additions paid to a participant’s account cannot exceed the lesser of:
    1.100% of the participant’s compensation, or
    2.$52,000 ($57,500 including catch-up contributions) for 2014 ($53,000, or $59,000 including catch-up contributions for 2015).

  10. Hi,
    Last year, 2014, I was finally able to put in the max 401(k) $17,500.00! I was able to obtain the max in December – due to bonus! Because of my age (49), my contributions to the 401(k) “stopped” – AND, so did my employers “match”. Is this correct, or should my employer continue to contribute a “match”?

    Had I contributed a lesser percentage during the year, I would have had a greater match from my employer – and that does not seem correct. (I am NOT anywhere near being highly compensated employee, I am a high percentage saver at over 20% of salary).

    If this is how 401(k)’s are set up, what do you recommend those of us high percentage savers do, to get the most match possible?

    Or, was there something wrong in stopping the “matching” portion?

    Thanks – Ann

  11. Hi, can you clarify something?

    On this page you say:
    > Matching 401K or 403b contributions made by your employer are counted towards your annual contribution limit

    But on https://savingtoinvest.com/401k-ira-and-roth-ira-contribution-and-income-limits/ you say:
    > Matching 401K or 403b contributions made by your employer are NOT counted toward your annual 401k contribution limits (elective deferrals), $17,500 in 2014

    It seems like these are contradictory, can you explain?

    • Thanks for catching that Phil. I have clarified my statement. The employer contribution/match does NOT count towards the individuals maximum limit ($18,000 in 2015), but does count towards the overall maximum contribution limit ($53,000) that includes employee and employer contributions.

  12. I have a similar question to Jim above (james answered to contact him, but he doesnt state an email adress).
    My company caps 401K contribution on all HCE. I dont make quite as much as Jim, but regarldess I am capped at 10% of my salary. I dont reach the 17K in contribution, what are my options otehrwise? My IRA deductions wont count since I get phased out, correct?

    Thank you for the help/clarification.

  13. Does the 401(k) max contribution limit include the employer match? Matching 401K or 403b contributions made by your employer are counted towards your annual contribution limit.

  14. Hi there…my husband just started at a new company. When he hit the 6 month mark, his employer deducted 50% of his earnings for 401k and this is mandatory. This will put him well over the 17,000 mark at the end of the year. Can they do this?

    • No…they should not be able to do this unless there was something in his contract that specified it. This seems rather strange and against the law.

      New rules allow employer to enroll employees into a plan by default with a 3 to 6% contribution rate (I have never heard of a 50% above the max contribution). But employees can opt out of this.

      So can employers force me to make 401K contributions? short answer – No.

  15. Andy, very succinct and understandable write-up! Question (because of info I have from other sources): I am 61 and am a HCE in cross-tested 401K. Is my total max target contribution permissible for 2012 $50,000 or $55,500? Is it the $50G you cite PLUS the $5500 catch up? I.E. $5500 catch-up, $17000 K election, and $33000 employer contribution? And for 2013: $5500 catch-up, $17500 K election, and $33500 employer contribution = $56,500 total? And is there a % limit on the employer contribution. e.g. not more than X% of my compensation (other than the 100% limit of course)? Thanks

    • Catch-up contributions are not subject to the annual general limits – so your limit would be $55,500. Your employer may or may not match your catch-up contribution (generally not) but their contribution would also not be in the maximum threshold (so technically you could have up to 61K max contribution in a year).

      The employers only need to contribute a % up to the employee salary of 250,000 in 2012 and 255,000 for 2013. So if you earn more than this, your employer does not need to use your higher wage base. For example if you employer matches up to 6%, then the max they have to contribute is .06*250,000 = $15,000 in a given year.

      • Frank – just did some more research and HCE compensation definition dollar threshold s are $115,000 for 2012. So your employer contribution maximum maybe lower (depending on their matching %)

      • Can an employer’s match equal the employee’s match even if it exceeds the $250,000 in income earned (in 2012)? As an example, if the matching program is 100% of the first 5% of employee deferral and an employee contributed the full $17,000 to the plan can the employer match also be $17,000? Or are they limited to 5% of $250,000 ($12,500)?

  16. Hi Andy, can the employee participate in the catchup contribution each year that the employee is 50 years old? Or is there a catchup limit or cap similar to the 15 year rule? Can the employee that is 50 years old by the end of 2013 contribute the catch up amount each year thereafter?
    Thank you,

  17. With so much risk around not having enough for retirement, why the heck is there ANY limit on 401K contribution by the employee. I gather it is so people do not avoid current taxes, but in the future it will be higher taxes anyway.

    As such, many more Americans are working longer with risk of injury on job and then really out of luck. Our government along with SS is saying… Hurry up and die.

    • Easy, because most rank and file employees can’t afford to put even $5,000 in the plan ever year, let alone $17,500, so very few people would benefit from raising the cap that much.

      That change would really only benefit HCE’s, and violate the principle of 401(k), which is a benefit for the employees.

      If you know anyone making 50,000 or so a year that can put away more than $18,000 a year, let me know. And if you know anyone that can put that much away, but hasn’t for that last 10 or so years, well, shame on them.

  18. I just received my 9-15-12 pay stub and there was no money taken out for my 401k. When I talked with HR they said I had was considered a highly compensated employee ($250K) for 2012 and when you reach that level you can no longer deposit any money into your 401k regardless of how little you have contributed. My point being that if you say had only put 10,000 in your account through and you reach the highly compensated level limits for 2012, your 401k deduction is stopped and you get cheated for the remainder of the year. I have a few questions.

    Does anyone know what would happen if you received a $250K check on January 1st? Does that mean you cannot contribute at all to your 401k?
    Does anyone know if the catch up contributioin for those over 50 counts against me as well? I was thinking that I could now or in January start adding in more money using my catch up contribution to help make it at least a little more palatable and get me to the $17000 max before I hit $250K again?
    I was also wondering if I got to the $17,000 limit before I hit $250K will they want money back when I do?

    I hope these questions make sense. THanks, Jim

    • Jim,

      You would need to ask your HR manager if they have the results of the non-discrimination tests for your (the ADP and ACT) for the 401(k). There are solutions for this situation but we would need to discuss the options with your company.

  19. If married filing jointing, and the spouse doesn’t work, does the amount double, and if so, can the entire contribution of the doubled amount be made from the working spouse’s compensation?

  20. I think there is an error in your statements above. I believe the $33,000 is not just the employer limit. It is the total limit, which could include both employer contributions and employee after tax contributions.

  21. Well,
    After many years of working in our organization (403b) without pay I am now on the payroll. How is my maximum contribution calculated with a Salary of $60,000., but no previous years of salary? Can I put in the full $17,000. Also at what time in the year can I pay the $5500 catch-up (I am 62).

  22. I would like to know if there is any provision for contributions to a 401 (k) plan in the current year to apply to the previous year. If so where can I find information on this issue.

    • Generally contributions to a 401K plan are only valid in the year they are made. However some employers do allow payments till Apr 15. However for an IRA or Roth IRA, you can make 2011 eligible contributions until Apr 17, 2012.

  23. Andy, can you please explain your contradicting statements “The 2012 maximum annual contribution is $50,000 (in 2011 it was $49,000), which INCLUDES elective deferrals, EMPLOYER MATCHING and discretionary contributions, but excludes catch-up contributions (see below). ” vs. the next paragraph where you state: “Maximum Employer contribution limits. Matching 401K or 403b contributions made by your employer are NOT counted toward your annual 401k contribution limits.” Which one is it? Does the annual limit include employer matching or not? Am I reading this incorrectly??

    • Marie – Thanks for the great question and catch. The maximum annual limit does include the employer match, but not the catch-up contribution. So in 2012, the $50,000 limit is made up of an employee (your) maximum of $17,000 vs $33,000 employer limit. The catch up contribution for those over 50 is $5500.

      I have updated the article to correct this.

  24. If your employer does not contribute to your 401k, then you are better off maxing out your own IRA first. You have many more and usually safer options. In addition, if you work for a small business, you are at the mercy of your employer’s possible incompetence and negligence. My own employer is particularly irresponsible at keeping up with his fiduciary duties. Employee contributions are deposited to the fund on a completely haphazard basis. And short of quitting, there is nothing we can do about it and still stay on the boss’ good side. Does anyone know if what he is doing (or not doing) is illegal and how one would go about reporting him to the proper authorities? Personally I quit contributing to my 401k years ago.


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