401k Contribution Limits 2023 With Employer Match
If you’re looking to maximize your retirement savings, then you may want to consider contributing to a 401k plan. This type of retirement plan allows you to save pre-tax dollars and give your money the potential to grow tax-deferred. With the right employer match, you can potentially double the amount you’re contributing to your retirement savings.
In 2023, the Internal Revenue Service (IRS) has set the maximum amount you can contribute to your 401k plan at $19,500. This applies to all individuals under the age of 50. If you’re 50 or older, then you can make an additional “catch-up” contribution of up to $6,500. This means that individuals 50 and older can contribute up to $26,000 in 2023.
Your employer may also provide a 401k matching contribution. This means that for every dollar you contribute to your 401k plan, your employer will match it up to a certain percentage. This is a great way to get the most out of your retirement savings, as you’re essentially getting free money. It’s important to note that employer matching contributions are not included in the $19,500 limit.
For example, let’s say your employer provides a 50% match on the first 6% of your salary that you contribute to your 401k plan. This means that if you contribute 6% of your salary to your 401k plan, then your employer will contribute an additional 3%. So if you make $50,000 a year and contribute 6%, then you’ll be putting $3,000 into your 401k plan and your employer will match it with an additional $1,500.
It’s also important to note that employer matching contributions are subject to certain limits. In 2023, the maximum employer contribution is $38,000, or $57,000 if you’re 50 or older. If your employer provides a 401k match, then it’s important to understand the limits and make sure you’re not exceeding them.
It’s also important to note that you may be subject to certain tax penalties if you exceed the contribution limits. If you go over the limit, then you’ll be required to pay the excess amount back to the IRS, plus any taxes and penalties that may apply. It’s important to understand the contribution limits and make sure you’re staying within them.
Overall, contributing to a 401k plan is a great way to save for retirement. With the right employer match, you can potentially double your contributions and get the most out of your retirement savings. It’s important to understand the contribution limits and make sure you’re staying within them in order to avoid any potential tax penalties.
Conclusion
Increasing your retirement savings with a 401k plan can be a great way to prepare for your future. In 2023, the IRS has set the maximum amount you can contribute to your 401k plan at $19,500. Your employer may also provide a 401k matching contribution, which is a great way to get the most out of your retirement savings. It’s important to understand the contribution limits and make sure you’re staying within them in order to avoid any potential tax penalties.