What is the 401(k) contribution limit for 2026?

The employee 401(k) contribution limit for 2026 is $23,500. If you're age 50 or older, you can contribute an additional $7,500 catch-up, for a total of $31,000.

What is the total 401(k) limit including employer contributions?

The total limit for employee plus employer contributions is $70,000 in 2026 ($77,500 for those age 50+).

Should I max out my 401(k)?

If you can afford it, maxing out your 401(k) provides significant tax savings and compound growth. At minimum, contribute enough to get your full employer match — otherwise you're leaving free money on the table.

401(k) Contribution Limits for 2026

The 401(k) is the most common retirement savings vehicle in America, used by over 70 million workers. Understanding the contribution limits and rules helps you maximize your tax advantages and retirement savings.

2026 401(k) Contribution Limits

Limit Type	2026 Amount
Employee contribution limit	$23,500
Catch-up contribution (age 50+)	$7,500
Total employee limit (age 50+)	$31,000
Employer + employee limit	$70,000
Employer + employee limit (age 50+)	$77,500
Compensation limit (for calculating employer match)	$350,000

Historical 401(k) Limits

Year	Employee Limit	Catch-Up	Total (50+)
2020	$19,500	$6,500	$26,000
2021	$19,500	$6,500	$26,000
2022	$20,500	$6,500	$27,000
2023	$22,500	$7,500	$30,000
2024	$23,000	$7,500	$30,500
2025	$23,500	$7,500	$31,000
2026	$23,500	$7,500	$31,000

How Much Does Maxing Out Save You?

The tax savings from maxing out your 401(k) are substantial:

Tax Bracket	Annual Tax Savings (max $23,500)	Tax Savings (50+, max $31,000)
12%	$2,820	$3,720
22%	$5,170	$6,820
24%	$5,640	$7,440
32%	$7,520	$9,920
35%	$8,225	$10,850

If you’re in the 24% bracket, maxing out your 401(k) saves you $5,640 per year in federal income taxes.

The Power of the Employer Match

Many employers match a portion of your contributions. Common match formulas:

Match Type	Your Contribution	Employer Adds	Total Annual Savings
100% up to 3%	3% of salary	3% of salary	6% of salary
50% up to 6%	6% of salary	3% of salary	9% of salary
100% up to 6%	6% of salary	6% of salary	12% of salary

Always contribute at least enough to get your full employer match. Not doing so is like declining a pay raise.

Example: $80,000 Salary, 50% Match Up to 6%

You contribute 6% = $4,800/year
Employer matches 50% = $2,400/year
Total: $7,200/year
Employer match = 100% instant return on the matched portion

Traditional 401(k) vs. Roth 401(k)

Many employers now offer both options:

Feature	Traditional 401(k)	Roth 401(k)
Contributions	Pre-tax (reduces taxable income)	After-tax (no immediate tax benefit)
Withdrawals	Taxed as ordinary income	Tax-free (after age 59½)
RMDs required?	Yes, starting at age 73	Yes (but can roll to Roth IRA to avoid)
Best if	Your tax rate will be lower in retirement	Your tax rate will be higher in retirement

General guidance:

Early career (lower income): Roth 401(k) — you’re in a low bracket now, and decades of tax-free growth is powerful
Peak earning years: Traditional 401(k) — the immediate tax deduction is more valuable when you’re in a higher bracket
Uncertain: Split contributions between both for tax diversification

401(k) Withdrawal Rules

Situation	Penalty	Taxes
Before age 59½	10% early withdrawal penalty	Yes (traditional)
Age 59½+	No penalty	Yes (traditional), No (Roth)
Rule of 55 (leave job at 55+)	No penalty from that employer’s plan	Yes (traditional)
Hardship withdrawal	10% penalty (some exceptions)	Yes
401(k) loan	No penalty (if repaid)	No (if repaid on time)

Required Minimum Distributions (RMDs)

Starting at age 73 (under SECURE 2.0), you must begin taking required minimum distributions from traditional 401(k) accounts. Roth 401(k) accounts also have RMDs, but you can avoid them by rolling to a Roth IRA.

401(k) Investment Strategy

Age Range	Suggested Stock/Bond Allocation
20s–30s	90/10 to 80/20
40s	80/20 to 70/30
50s	70/30 to 60/40
60s	60/40 to 50/50

Target-date funds automatically adjust this allocation as you approach retirement and are the most popular choice in 401(k) plans.

401(k) Fees Matter

The average 401(k) expense ratio is about 0.50%, but some plans charge over 1%. Over a career, this difference is enormous:

Fee Level	Balance After 35 Years ($500/month, 7% return)
0.10% (low-cost index)	$868,000
0.50% (average)	$798,000
1.00% (expensive)	$718,000
1.50% (high-cost)	$645,000

The difference between a 0.10% and 1.00% fee is $150,000 over a career. Check your plan’s expense ratios and advocate for lower-cost index fund options if available.

What Happens to Your 401(k) When You Leave a Job

Option	Pros	Cons
Leave it in old plan	No effort needed	Can’t contribute; may have higher fees
Roll to new employer’s 401(k)	Consolidation; may have better funds	Limited to new plan’s options
Roll to an IRA	Most investment choices; often lowest fees	Can’t use Rule of 55
Cash out	Immediate cash	10% penalty + taxes; destroys retirement savings

Rolling to an IRA is usually the best option for most people, providing the widest investment selection and often the lowest fees. Never cash out — the penalties and lost compound growth are devastating.