2026 401(k) Contribution Limits
| Parameter | 2026 Limit |
|---|---|
| Employee Elective Deferral | $23,500 |
| Catch-Up (Age 50+) | $7,500 |
| Total Employee (Age 50+) | $31,000 |
| Total Annual Addition (415(c)) | $70,000 |
| Compensation Limit | $345,000 |
How Employer Matching Works
Employer matching is essentially free money added to your retirement savings. The most common match structures are:
- Dollar-for-dollar up to X% — Employer matches 100% of your contribution up to a percentage of salary (e.g., 100% match on first 3%)
- 50 cents on the dollar — Employer matches 50% of your contribution up to 6% of salary (most common)
- Non-elective contribution — Employer contributes a flat percentage regardless of your contribution (e.g., 3% of salary)
Rule of thumb: Always contribute at least enough to capture the full employer match. If your employer matches 50% up to 6%, contribute at least 6% — otherwise you're leaving free money on the table.
Traditional vs Roth 401(k)
| Feature | Traditional 401(k) | Roth 401(k) |
|---|---|---|
| Tax on contributions | Pre-tax (deductible) | After-tax |
| Tax on withdrawals | Taxed as income | Tax-free |
| RMDs | Yes (age 73) | Yes (age 73) |
| Best for | High earners now, lower bracket later | Expect higher taxes in retirement |