401k Contribution Limits
Limits for 2026, set by the IRS each November. Employer contributions do not count toward your own limit, only toward the overall cap.
| Category | Annual Limit |
|---|---|
| Employee contribution (under 50) | $24,500 |
| Catch-up contribution (age 50-59, 64+) | +$8,000 |
| Enhanced catch-up (age 60-63, SECURE 2.0) | +$11,250 |
| Total including employer contributions | $72,000 |
From 2026, if you earned more than $150,000 in FICA wages from your employer the year before, any catch-up contribution must go in as Roth (after-tax) money. Your regular contributions can still be traditional.
How an employer match works
A common formula is "50% of the first 6%". If you earn $75,000 and contribute 6% ($4,500), your employer adds half of that, $2,250. Contribute 4% and you only get $1,500. Contribute 10% and the match stays at $2,250, because it is capped at 6% of pay. Not contributing at least up to the cap leaves part of your pay on the table. Some plans also vest the match over several years, so check how long you must stay to keep it.
The Power of Starting Early
Consider two savers, both earning $75,000 and contributing 6% (with a 6% employer match): Alice starts at 25 and retires at 65. Bob starts at 35 and retires at 65. Assuming 7% annual returns:
- Alice (40 years): approximately $1.8 million
- Bob (30 years): approximately $850,000
Both put in $9,000 a year ($4,500 each from them and the employer, with no pay rises). Ten fewer years costs Bob almost a million dollars in retirement savings, demonstrating why starting as early as possible, even with small contributions, is the single most impactful 401k decision.
Fees are a quiet drag
A fund charging 1% a year instead of 0.1% sounds small. Over 35 years it can take 20% or more off the final balance, because the fee is charged on the whole balance every year, including the growth. Index funds inside most 401(k) plans cost well under 0.2%. The "Fees over the years" figure above shows what your chosen fee costs in dollars.
Traditional or Roth 401(k)?
Traditional contributions reduce your taxable income now; you pay income tax when you withdraw. Roth contributions are taxed now; qualified withdrawals, growth included, are tax-free. If you expect a higher tax rate in retirement than today, Roth tends to win. Many people split between the two. This calculator shows the account balance before any tax on withdrawal.