The maximum amount a person can contribute to his or her retirement account is set each year by the IRS after taking inflation into account. For the year 2020, you can contribute up to $19,500 as an elective deferral to your employer’s 401(k) plan. If you are age 50 or older, you can contribute an additional catch-up contribution of $6,500.

The 401(k) limit applies to all 401(k) accounts you might have for the current year. If you work at two or more jobs — or switch jobs in the middle of the year — then you may need to track your contributions yourself to ensure that you don’t contribute beyond the limit.

For people who plan to contribute the maximum allowed, it may be easiest to break the annual limit into equal dollar amounts per pay period. That way, you’ll be saving the same amount each pay period and will be dollar-cost averaging into your retirement investments.

Elective deferrals are treated separately from the employer’s matching contributions. Elective salary deferrals can be placed into a tax-deferred traditional 401(k), a post-tax Roth 401(k) account or a combination of traditional and Roth, as long as the total of all salary deferrals are equal to or less than the annual maximum. Matching contributions from the employer are limited to 25 percent of your salary (or 20 percent of your net self-employment income if you are self-employed). Matching funds are always contributed to the tax-deferred portion of your 401(k) plan. The total of your elective salary deferral, plus employer matching contributions, is limited to $57,000 for the year 2020.



Type of Limitation 2020 2019 2018
Elective Deferral Limit (401(k) and 403(b) Plans; Not Including Catch-Up Contributions) $19,500 $19,000  $18,500
Catch-Up Contribution Limit (401(k) and 403(b) Plans) $6,500 $6,000 $6,000
Elective Deferral Limit (SIMPLE Plans) $13,500 $13,000 $12,500
Catch-Up Contribution Limit (SIMPLE Plans) $3,000 $3,000 $3,000
Defined Benefit Plan Limit $225,000 $225,000 $220,000
Defined Contribution Plan Limit $57,000 $56,000 $55,000
Annual Compensation Limit $285,000 $280,000 $275,000
Key Employee Threshold $185,000 $180,000 $175,000
Highly Compensated Employee Threshold $135,000 $125,000 $120,000
Income Subject to Social Security Tax $137,700 $132,900 $128,400

While the 2020 annual contribution and benefit limits have not changed significantly from last year here are a few of the highlights:

  • The 401(k) & 403(b) maximum annual elective deferral limit increased to $19,500
  • The elective deferral limit (SIMPLE Plans) limit has increase to $13,500
  • The defined benefit annual limit has increase to $230,000
  • The annual defined contribution limit has increased to $57,000
  • The annual compensation limit increased to $285,000
  • Key Employee threshold increased to $185,000
  • Highly Compensated Employee threshold increased to $130,000
  • The income subject to social security tax increased to $137,700
  • The 401(k) & 403(b) catch-up limit increased to $6,500

To download the 2020 annual contribution limits, click here.