Your grandparents had pension plans, you have a 401(k).
It’s a downgrade in some ways — 401(k)s force employees to shoulder most of the responsibility of saving for retirement and choosing appropriate investments. They also limit your contributions: Because 401(k)s are tax-advantaged, they have a maximum annual contribution set by the IRS each year.
401(k) contribution limits for 2017
|Age||Elective deferral limit||Total contribution limit|
|50 or older||$24,000||$60,000|
The elective deferral limit is 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.
The total contribution limit includes both money you contribute and employer matching dollars — it is the maximum total annual contribution that can be made to your 401(k).
In 2017, your total 401(k) contributions — from yourself and your employer — cannot exceed $54,000 or 100% of your compensation, whichever is less. That limit rises to $60,000 for those 50 or older.
Updated March 14, 2017.