Advertiser Disclosure

401(k) Contribution Limits 2019 and 2020

The 401(k) contribution limit increased in 2019, to $19,000. Those 50 or older can contribute up to $25,000.
Nov. 22, 2019
401(k), Investing, Retirement Planning
At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Because 401(k)s are tax-advantaged, they have a maximum annual contribution limit set by the IRS. That limit sometimes gets 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 2019, your total 401(k) contributions — from yourself and your employer — cannot exceed $56,000 or 100% of your compensation, whichever is less. That limit rises to $57,000 in 2020.

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