New 401(k) Contribution Limits for 2015

The maximum amount of contributions a person can make to his or her 401(k) plan is set each year by the IRS. For the year 2015, people can contribute up to $18,000 as an elective salary deferral to a 401(k) plan. Additionally, if you are age 50 or older, you can contribute an additional catch-up contribution of $6,000. This is an increase from the years 2013 and 2014, where people could only contribute up to $17,500 as an elective salary deferral and $5,500 as a catch-up contribution.

401(k) Contribution Limits by Year
Year Elective Salary Deferral Limit Catch-up contributions if age 50 or older Total Possible Employee Contribution Limit Source
2015 $18,000 $6,000 $24,000  IR-2014-99
2014 $17,500 $5,500 $23,000 IR-2013-86
2013 $17,500 $5,500 $23,000 IR-2012-77
2012 $17,000 $5,500 $22,500  IR-2011-103
2011 $16,500 $5,500 $22,000  IR-2010-108
2010 $16,500 $5,500 $22,000 IR-2009-94
2009 $16,500 $5,500 $22,000  IR-2008-118

The 401(k) limit applies to all 401(k) accounts you might have for the current year. If you work at two or more jobs or switch jobs in the middle of the year, then you may need to track your 401(k) contributions yourself to ensure that you don’t contribute over the limit.

For people who plan to contribute the maximum allowed, it may be easiest to break the annual limit into equal installments per pay period. That way, you’ll be saving the same amount each pay period and will bedollar-cost-averaging into your retirement investments.

Elective deferrals are treated separately from the employer’s matching contributions. Elective salary deferrals can be placed either into a tax-deferred traditional 401(k) or into a post-tax Roth 401(k) account, or into a combination of traditional and Roth as long as the total of all salary deferrals are equal to or less than the annual maximum. Matching contributions from the employer are limited to 25% of your salary (or 20% of your net self-employment income if you are self-employed). Matched funds are always contributed to the tax-deferred portion of your 401(k) plan. The total of your elective salary deferral plus employer matching contributions is limited to $52,000 for the year 2014, to $51,000 for the year 2013, and to $50,000 for the year 2012.

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