401(k) Max Contribution Basics 2023: Do You Know How it Works?

See maximum limits and, more importantly, what goes into the 401(k) max contribution. For 2023, the annual limit is up to $22,500 of your own pay, and the total amount that can go into your account is $66,000. For those over age 50, another $7,500 catch-up is allowed. But this can get complicated, and if you’re hoping to max out your 401(k), it’s helpful to understand all of the pieces involved. Get free retirement planning resources: 🔑 9 Keys to Retirement Planning 🐢 6 Safest Investments Contributions can be employee or employer contributions (or both). When your employer contributes, you might get matching money, profit-sharing dollars, or other types of contributions to your account. 🌞 Subscribe to this channel (it's free): Employee money can often go in pre-tax or as Roth-type money. The choice you make depends on what’s available and what makes the most sense for your strategy. And some plans allow voluntary after-tax contributions. You don’t get a deduction for those savings, but you might be able to convert to Roth and set yourself up for tax-free income later in life. We’ll also cover some frequently asked questions about how the 401(k) max works: -Can you double the max contribution if you use both Roth and pre-tax contributions? -And do Roth 401(k) contributions count for the employer match? -How can you double the maximum limit for 401(k) contributions (there are two possibilities)? Related topics: What 401(k) Fees Do You Pay? Contribution limits from the IRS: Working multiple jobs: Read the updated article: Learn about working with me at ✔️ Flat-fee and hourly advice options ✔️ One-time projects available ✔️ Investment advice (optional) Justin Pritchard, CFP® is a fee-only fiduciary advisor who can work with clients in Colorado and most other states. 00:00 Limits for 401(k), 403(b), TSP, etc. 01:44 Types of Contributions 03:09 Employee Contributions 04:21 Roth 401(k) Contributions 05:00 Voluntary After-Tax (Mega Backdoor Roth) 06:30 Catch-Up Contribution Over age 50 06:47 401(k) Contribution Max for 2023 07:46 Limits Increase With Inflation 08:16 Example of Max Contribution to 401(k) 09:58 FAQs 12:37 Multiple 401(k) Plans and 457 13:24 Maxing Out With Multiple Employer Contributions 14:57 Limitations: ADP or ACP Nondiscrimination Tests 16:30 What if You Don’t Have a 401(k)? IMPORTANT: Check with your plan administrator and employer, then triple-check with your CPA. It's impossible to cover everything you need to know in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. “Likes” should not be considered a positive reflection of the investment advisory services offered by Approach Financial, Inc. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration....(read more)

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