Advertiser Disclosure

401(k) Contribution Limits 2020 and 2019

The 401(k) contribution limit increased to $19,500 in 2020. Those 50 or older can contribute up to $26,000.
Aug. 1, 2020
401(k), Investing, Retirement Planning
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

Because 401(k)s are tax-advantaged, the IRS sets maximum annual 401(k) contribution limits. The limits sometimes get adjusted from year to year.

401(k) contribution limits for 2019 and 2020

Age2019 401(k) contribution limit 2020 401(k) contribution limit
Under 50 $19,000$19,500
50 or older$25,000$26,000

Note that the amounts above are the “elective deferral limit” — the amount you, as an employee, are allowed to contribute out of your salary each year. Employer matching dollars do not count toward that limit.

» Planning to max out? Continue saving for retirement in an IRA

Employer contribution rules

There’s a reason employees are encouraged to take advantage of employer-matched 401(k) plans: free money. Employers who match employees’ contributions often do so between 3% and 5% of your salary. So if you make $50,000 and contribute 5% of your salary ($2,500) and your employer matches that 5%, you’ll add $5,000 to your balance each year.

The 401(k) also has an annual total contribution limit, which caps the combined amount you and your employer can contribute. In 2020, your total 401(k) contributions — from yourself and your employer — cannot exceed $57,000 or 100% of your compensation, whichever is less. That limit rose from $56,000 in 2019.

401(k) contribution limits for highly paid employees

The IRS has a test that helps employers who sponsor 401(k) plans assess each year whether employees are participating in their plan at levels proportionate to the employees’ compensation. If the test determines that people across compensation levels are not participating in a manner the IRS deems proportionate, employee contribution levels for highly compensated employees can be lowered. In these cases, your employer may need to return some of your excess contributions.

About the author