Discover comprehensive insights into 401k contribution limits for 2017-2018, including employee, employer, and catch-up contributions. Learn strategies to maximize your retirement savings within regulatory boundaries and plan effectively for your future.

Understanding 401k Contribution Restrictions

A 401k retirement plan is a sponsored program that allows employees to save a portion of their earnings pre-tax. These contributions are essential for building a secure retirement fund. There are annual caps on how much you can contribute, which are important to understand:

Employee Contribution Limits (2017–2018)
In 2017, employees could contribute up to about $18,000, increasing to roughly $18,500 in 2018. This limit combines all pre-tax and post-tax contributions across any 401k accounts owned. If you have multiple plans, the combined contributions must stay within these bounds.

Contributions to other retirement savings options do not count towards these limits.

Additional Contributions for Employees Over 50
To assist workers nearing retirement age, those over 50 can make extra catch-up contributions. Besides the standard $18,500 limit in 2018, they can add up to $6,000 more, boosting their retirement savings potential.

Employer Contributions
Since 401k plans are funded by employers, there are also contribution limits on what employers can contribute. These often surpass employee limits and include matching and elective contributions, regardless of employee contributions. In 2018, the employer contribution cap was roughly $36,500, up from about $36,000 in 2017.

Total Contribution Cap (2017–2018)
The IRS sets a ceiling on combined contributions — employee, employer, and others — at approximately $55,000 in 2018. Employees over 50 can contribute additional catch-up amounts, bringing the total up to around $61,000. These limits cover all of your retirement accounts, even multiple 401k plans.

Strict rules apply for highly compensated employees to prevent unfair advantages. Planning contributions within these limits helps optimize retirement savings.

Note:

This overview blends research, expert advice, and current data. Regulations and market conditions change, so always consult a financial advisor before making contribution decisions. This content is for informational purposes only and may not be fully up to date.