401(k) Contribution Limits: Everything You Need to Know

• The federal government establishes inflation-indexed limits on 401(k) contributions to help benefit American workers while also not allowing high earners to protect too much of their savings from taxation.
• Many 401(k) plans may lack a wide range of asset options, or may have management fees in excess of those charged through other retirement accounts.
• Rolling over 401(k) assets into an IRA can be one way of opening up your ability to own a wider variety of assets in your retirement accounts, including physical assets like gold and silver.

With the demise of pension plans, 401(k) plans have become the most popular employer-sponsored retirement plan in the United States. With over 70 million 401(k) participants, Americans have trillions of dollars saved up in 401(k) plans, helping them to get financially prepared for retirement.

The major benefit of 401(k) retirement plans is their tax-advantaged status. Employees can contribute to their 401(k) plan before taxes, allowing them to contribute more money than if they waited to contribute after-tax dollars.

Those contributions are also deducted from annual income, meaning that employees also pay less income tax in the present. Gains within a 401(k) plan accrue tax-free, with taxes only being assessed when employees decide to or are required to take a distribution.

But as with anything that saves you tax payments, the government won’t let you have too much of a good thing.

Governments depend on tax revenue, so the federal government has placed limits on how much individuals can contribute to a 401(k) plan each year. Otherwise, there would be an incredible incentive to contribute huge amounts of money into 401(k) plans to shelter more and more money from taxation.

The contribution limits are normally indexed to inflation and can change each year. Before the beginning of each tax year, the Internal Revenue Service (IRS) will announce changes to the 401(k) contribution limit, so it can help to watch the IRS website for any announcements.

401(k) Contribution Limits for 2026

Year	401(k) Contribution Limit	401(k) Catch-Up for Over-50s	401(k) Catch-Up for 60-63s
2023	$22,500	$7,500	N/A
2024	$23,000	$7,500	N/A
2025	$23,500	$7,500	$11,250
2026	$24,500	$8,500	$11,250

For 2026, individuals are able to contribute up to $24,500 to a 401(k) plan, an increase from the $23,500 401(k) contribution limit in 2025. IRS also allows employees older than 50 to make “catch-up” contributions to 401(k) accounts to help boost their savings before retirement.

The limit for catch-up 401(k) contributions was $7,500 in 2025, and increased to $8,500 in 2026. Additionally, seniors ages 60-63 are eligible to make increased catch-up contributions of up to $11,250 in 2026.

It’s common for many companies to make contributions to employees’ 401(k) plans too. The average employer contribution is about 4.6% of salary. But there are limits to how much employers can contribute.

For 2026 the maximum combined employer and employee 401(k) contribution is $72,000, or $80,500 with catch-up contributions.

These limits will most likely increase again in 2027, as they are indexed to inflation. The official IRS figures are normally published in late October or early November, so if you really want to stay on top of things, you can browse the IRS website in the fall to find updated numbers.

Highly-Paid Employee 401(k) Contribution Limits

Because well-paid employees can contribute more money to 401(k) plans than those who make less money, IRS wanted to make sure that 401(k) plans weren’t disproportionately benefiting high rollers. Thus, there are limits as to how much highly-compensated employees (HCE) can contribute to a 401(k) plan.

The threshold for being a highly-compensated employee for 2026 is $160,000. Once your compensation exceeds that threshold, your ability to max out a contribution to a 401(k) plan can be significantly reduced.

If you find out after the fact that you are a highly-compensated employee, any excess money you contributed will be refunded to you, and you’ll then owe taxes on that additional compensation.

If you’re at or near that highly-compensated employee threshold, you may want to contact your company’s HR, benefits, or payroll department to see whether you’re considered highly-compensated. It also can’t hurt to contact a financial adviser to see how you can plan for retirement if your ability to contribute to a 401(k) plan is hampered.

Understanding 401(k) Rules

Contribution limits to 401(k) plans exist because the IRS didn’t want just highly-paid employees to benefit from the tax advantages of a 401(k). The IRS wanted all employees at every level to be able to save for retirement.

If you find yourself maxing out your 401(k) contributions, or if you find that you’ve hit a lower 401(k) contribution limit because of your income level, there are other ways to save for retirement that are similarly tax-advantaged.

You can start an individual retirement account (IRA), which also offers many of the same tax advantages as a 401(k) plan. Annual IRA contribution limits for 2026 are $7,500, or $8,600 for those over age 50.

You can even start a gold IRA, which can place your assets into physical gold. Funding a gold IRA can be done either through annual contributions or through a gold 401(k) rollover. That’s an especially popular option for those whose 401(k) asset options are limited, or who want to help safeguard their 401(k) assets with a time-honored safe haven asset.

401(k)s vs. IRAs

• While workplace 401(k) plans allow higher individual annual contribution limits, Americans actually hold significantly more money in IRAs, likely due to the ability to roll over funds from 401(k)s into IRAs.
• Rollovers permit account holders to transfer unlimited amounts of accumulated savings from a 401(k) into a self-directed IRA without violating annual contribution caps or triggering taxes or penalties.
• Moving funds from a 401(k) into a gold IRA can help you expand your asset options and allow you to help protect your wealth with physical precious metals.

Although 401(k) plans are the predominant form of workplace retirement account, Americans actually hold trillions more dollars in IRA accounts, with over $18 trillion held in IRAs versus less than $10 trillion in 401(k) accounts.

If you didn’t know any better, you might think that this is because IRA accounts have higher annual contributions limits. But that isn’t the case.

The ability to roll over assets from 401(k) to IRA accounts allows people who have built up wealth in 401(k) accounts to move that wealth into an IRA account, which in many cases can expand their ability to buy and hold assets that they might not be able to in a 401(k).

IRA vs. 401(k) Annual Contribution Limits

The IRS sets limits on how much money you can contribute each year to IRA and 401(k) accounts. Here is how IRA and 401(k) annual contribution limits compare.

Year	IRA Contribution Limit	IRA Additional Catch-Up for Over-50s	401(k) Contribution Limit	401(k) Catch-Up for Over-50s	401(k) Catch-Up for 60-63s
2023	$6,500	$1,000	$22,500	$7,500	N/A
2024	$7,000	$1,000	$23,000	$7,500	N/A
2025	$7,000	$1,000	$23,500	$7,500	$11,250
2026	$7,500	$1,100	$24,500	$8,000	$11,250

For 2026, the maximum individual contribution across all your IRA accounts combined is $7,500, or $8,600 if you qualify for the $1,100 catch-up contribution for savers aged 50 and older.

By contrast, a 401(k) permits individual contributions up to $24,500 in 2026. Savers aged 50–59 and 64+ can contribute up to $32,500 by taking advantage of the additional $8,000 catch-up provision, while those aged 60–63 can contribute up to $35,750 due to special super catch-up regulations.

Comparing Features: 401(k) vs. IRA

If you can contribute more money each year to a 401(k) than an IRA, why would you start an IRA? Here are some of the differences between 401(k)s and IRAs that cause so many people to choose to roll over 401(k) funds into an IRA.

Feature	401(k) Plan	IRA Account
Ownership	Plans established by employer, managed by employer-selected firms	Established by account holder independent of employer
Employer Funding Match	Some employers match a certain percentage of 401(k) elections	Not available
Asset Choices	Limited to what the plan manager allows Often just a mix of mutual funds or exchange-traded funds (ETFs)	Wide array, depending on what custodian offers Self-directed IRA opens up ability to acquire alternative assets such as gold and silver
Rollovers Allowed	Outbound rollovers permitted if plan manager allows in-service withdrawals Inbound rollovers permitted if plan manager allows it	Unlimited direct rollovers and transfers allowed Only one indirect rollover allowed per year from IRA accounts

Funding an IRA: The Power of Rollovers

Because IRA annual contribution limits are so much lower than annual 401(k) contribution limits, the primary means of building up large IRA balances is through rollovers from 401(k) accounts to IRA accounts. Rollovers of funds from 401(k)s to IRAs are not subject to annual contribution limits.

That means you could roll over $10,000, $100,000, or even $1 million from a 401(k) account into an IRA account. And if you follow IRS regulations properly, that rollover can be made tax-free.

Why Roll Over Funds From a 401(k) to an IRA?

So why might someone want to roll over funds from a 401(k) to an IRA? Here are a few possible reasons.

• Regain control over funds sitting in “orphaned” 401(k) accounts sitting idle at previous employers.
• Escape high fees and limited asset options of your current 401(k) plan
• Diversify retirement savings away from assets that are susceptible to loss in the event of a financial downturn
• Move money into tangible physical safe haven assets like gold and silver

Essential Rollover Rules and Considerations

• Rollover Frequency Restrictions: IRS rules limit indirect IRA-to-IRA rollovers to one per 12-month period, though direct custodian-to-custodian transfers and rollovers are unlimited.
• Restrictions on In-Service Withdrawals: Some workplace 401(k) plans restrict in-service withdrawals, meaning that you won’t be able to move your money out of your 401(k) until you either leave your employer or reach age 59½.
• Tax-Free Transfers: Choosing to roll over funds through a direct transfer between custodians can help make sure that you don’t accidentally trigger income taxes or potential penalties.

Learn How to Take Control of Your Retirement Savings With Goldco

If you’ve maxed out your 401(k) contribution limit, don’t let that dissuade you from continuing to save money. Have you ever known anyone who got to retirement wishing they had saved less money?

If you’ve reached the 401(k) contribution limit or maxed out your IRA contributions, you might also give some thought to mixing up your holdings and diversifying your portfolio.

Rolling over existing retirement assets from a 401(k) to a gold IRA can be done easily and tax-free, allowing you to help protect your assets with physical gold coins and gold bars while still enjoying the tax advantages of an IRA account.

Don’t let your ability to save for retirement dwindle because you don’t know the ins and outs of 401(k) plans and how to contribute to your retirement savings. Contact Goldco’s precious metals specialists today to learn more about how you can maximize the potential of your 401(k).

This article was originally published in October 2019 and was updated in August 2026.