Does the 401(k) max contribution limit include the employer match?

There is a maximum limit on the total yearly employee pre-tax salary deferral. The limit is $17,000 for the year 2012, and $17,500 for the year 2013. Employees who are 50 years old or over at any time during the year are now allowed additional pre-tax “catch up” contributions of up to $5,500 for 2012 and 2013.

For future years, the limit will be indexed for inflation, increasing in increments of $500. In eligible plans, employees can elect to have their contribution allocated as either a pre-tax contribution or as an after tax Roth 401(k) contribution, or a combination of the two. The total of all 401(k) contributions must not exceed the maximum contribution amount.

If the employee contributes more than the maximum pre-tax limit to 401(k) accounts in a given year, the excess must be withdrawn by April 15th of the following year. This violation most commonly occurs when a person switches employers mid-year and the latest employer does not know to enforce the contribution limits on behalf of their employee. If this violation is noticed too late, the employee may have to pay taxes and penalties on the excess. The excess contribution, as well as the earnings on the excess, is considered “non-qualified” and cannot remain in a qualified retirement plan such as a 401(k).

Plans set up under section 401(k) can also have employer contributions that (when added to the employee contributions) cannot exceed other regulatory limits. The total amount that can be contributed between employee and employer contributions is the section 415 limit, which is the lesser of 100% of the employees compensation or $50,000 for 2012 and $51,000 for 2013. Employer matching contributions can be made on behalf of designated Roth contributions, but the employer match must be made on a pre-tax basis.

Update 1: If you’re still confused, read the comments for further clarification.
Update 2: Updated with the limits for 2013.
Update 3: This chart should help:

401k Limits 2013

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85 Responses to “Does the 401(k) max contribution limit include the employer match?”

  1. Russell on July 18th, 2011 9:53 pm

    LP, if you want the contributions to be Roth designated, then you must defer them from your W-2 Wages. So, you could pay yourself $22,000 and defer 100% of that, and the company could match a portion of this say 5% of your income and/or dole out $27,000 just to be generous (non-match distribution). This works only if you and your husband are the only eligible employees. If there are other employees, found to be eligible, and have not been informed of their right to participate, the IRS would not like that. All employees who are full time workers are eligible and the non-match distribution ($27,000 for you $27k for him) would be distributed to all the employees based on their salaries. This “everyone gets a piece” distribution does not apply to the match portion, which is defined by the nature of how you set up the rules for your 401k.

  2. Steve Sr on August 4th, 2011 5:19 pm

    one other thing – you guys keep saying $15,500 but it is $16,500…what I thought before it was confirmed by reading the article(and incorrect in the comments and uncorrected).

    it is of course off the gross salary before taxes right? like if someone has a gross salary of 50grand they take the 15% you elect as one example before the taxes, but also before you pay helth ins, union fees, dental, life ins, etc, etc?? and then after the 5% employee match comes the same wy as one example of the percenatge?

  3. Steve Sr on August 4th, 2011 10:28 pm

    Guys, I need help…I used to do percentages but I just tonight changed our retirement to dollar amounts to beat the 16,500 limit bit:

    my wife has 24 payperiods per yr and I get paid every 2 weeks so I have 26.

    I did $687 per payperiod for her and $634 per payperiod for me. This yr we’re safe because it is august, and I will need to make sure next yr the limit stays the same or grows for 2012. My question is this: is it too risky to push the envelope like this. I know one payperiod ended jan 2nd 2011 I believe. Is it possible I am not thinking of everything because I am not an expert on this and I will go over some how? I am 100% positive I have 26 payperiods per yr and my wife gets paid twice a month for 24 payperiods. Am I doing somethign wrong??!!

  4. PremixYZ on August 5th, 2011 6:10 pm

    I understand the $49k limit now and the need for the cap of 100% of your annual salary.
    With my own business I can give myself an annual match of $49k and not have any other contribution. Of course I could put the $49k in 401k, put most of my money back into the business and then claim I only paid myself $20k this year. Uncle Sam would not be keen on that so they include that 100% limit. So as long as I pay myself $49k and then do a company match of $49k all is well. Not sure there are any public companies that people work for these days that would match even close to that.

  5. KLF1010 on August 11th, 2011 2:44 pm

    @ Premix (and others)
    My large, 5000+ employee, publicly-traded employer (financial industry) does a 50% match yrs 1-3 of employment, 100% match yrs 4-9, 150% match yrs 10-14, and 200% (!!) match yrs 15+ up to 6% of my salary. So, if I were making $200,000/ yr and worked here 16 years and contributed my $16,500 max, my employer would contribute $24,000 ($200,000 x 6% x 200%). That only puts us at $40,500, so there is room for profit sharing deposits, etc. Just thought I’d throw it out there since everyone seemed to think such a benefits package was some kind of unicorn. Now, let’s see if it lasts another 13 years so I can reap those benefits!

  6. Needhelp on August 18th, 2011 6:23 pm

    Good discussions. I need help. I have a 401K with my employer and it is invested in prudential. With my current rate of contribution, I will exceed the $16.5K by year end (by $2k or so). However, if I lower my %, I would lose the contribution matching I am getting from my employer. What happens if my (own) contribution exceed $16.K? Do I have to fill out other forms to pay the tax on it? Is there a work around so I do not lose the matching ? Please advise. Thank you.

  7. Confusion Reigns on October 7th, 2011 9:51 pm

    Dear Needhelp,

    Depending on the rules of your company’s 401K plan, you may be able to make after-tax contributions to meet the employee contribution percentage. My company allows both pre-tax and after-tax contributions to allow the employee to meet the company match contribution percentage.

    As far as the exceeding the $16.5K, I would think that if you are only allowed pre-tax contributions, the contributions would be stopped by your payroll department once you reach the $16.5K limit. This is how my pre-tax contributions are handled. However, my company allows the pre-tax contribution to change over to after-tax contributions so as to continually meet the company match through to the end of the year and thus maximize the company’s contribution. If you don’t have that option then I would call someone in your payroll or HR department for help.

    My question – what is the maximum 2011 401K contribution limit?

    Nearly all the websites, inlcuding this one, and experts I have asked indicate that the maximum 2011 401K contribution limit is $49,000, which I understand. However, as other people have asked here, does this include the catch-up contributions? I’ve checked the IRS website and am still confused as there seems to be conflicting information:,,id=211334,00.html
    indicates that “Catch-up contributions are not subject to the above limit.” referring to the $49,000 limit. Which to me, would mean that the total contribution limit for people making the maximum catch-up contribution of $5,500 is $54,500. However:,,id=151786,00.html
    under the “Additional Limits” subtitle at the bottom of the page, indicates the maximum contribution from all sources (pre-tax, after-tax, employer, is $49,000. Thus an apparent contridiction, at least from where I stand. I even asked the company administering my company’s 401K plan and I got two different answers: $49,000 including catch-up contributions and $54,500 ($49,000 + $5,500 catch-up contribution).

    Maybe the id=211334 webpage came after the id=151786 webpage to clarify this issue?

    Has anyone received an answer to this question directly from the IRS? I tried today, but didn’t have the time to wait on the phone long enough to get to speak to anyone.

    Also, Pub 525 doesn’t go into any detail to clarify the catch-up contribution scenario.

  8. Confusion Reigns on October 7th, 2011 10:21 pm

    For the another resource opining the $54,400 maximum 401K contribution limit for over 50’s see: and select the 2011.pdf link under the “FALL 2010” title.

  9. Bernadette Russell on October 12th, 2011 8:59 am

    I understand that $49M is the total a person canput into a 401K (which includes the person’s max of $16.5M & the rest from an employer). But what about also putting $5M (or $6M if ofer 50) into an IRA. That would make that person’s total deferred amount $54M. Is that OK?

  10. Clifton on November 24th, 2011 9:12 am


    Ok I have a quick question. First let me say that I am positive this article is explained very well but as I am very young and just learning about 401k’s, I’m a bit ignorant on the subject. Ok, that being said, my question is….

    First, If I have a job (beginning 2012 [new limit: $17,000]) making $8/hr, 40hrs week, this would be $320/wk before taxes. Is it possible to contribute the entire $320/wk for 52 weeks totaling $16,640??? I realize no one would ever do this but I am just curious if this is possible.

    2nd, if my employer states that they match 100% of my contribution (I realize that this may be rare or even nonexistent but hypothetically speaking) would that mean that they would also contribute $320/wk for 52wks totaling an additional $16,640????

    Making my total contribution for the year $16,640 x 2= $33,280????

    Side note: If those were really stupid questions, sorry. I’m only 19 :) And if your wondering, the part of your article that I was a bit confused about is as follows:

    *The TOTAL amount that can be contributed BETWEEN EMPLOYEE AND EMPLOYER CONTRIBUTIONS is the section 415 limit, which is the LESSER of 100% of the employees compensation or $49,000 for 2010 and 2011.

    It’s the “LESSER of 100%” part that I was confused about. Basically, if I am already contributing my entire check, 100% (assuming that’s even possible) and my employer contributes additional monies, the total contribution for the year would in fact be MORE than 100% of my compensation since I already contributed 100%. Since you wrote that it is the LESSER of 100% of the employees TOTAL compensation or $49,000 (2010,2011), I am a bit confused. Sorry.

  11. Clint on November 25th, 2011 6:53 pm


    It’s a good question. Because your total pre-tax compensation of $16,640 is less than $49,000, $16,640 is the maximum amount that can be contributed to your 401k in the calendar year. To answer the specific questions you asked:

    1. Yes, as long as your plan allows it, you could contribute 100% of your pre-tax earnings to your 401k, but you would be at your limit and not eligible for employer contributions.
    2. In the this scenario your own contributions are reaching your 401k max for the year, so you would not be eligible to receive any of the 100% employer match.

    The best thing to do in this scenario would be to contribute 50% of your pre-tax compensation to your 401k, and receive the matching 50% from your employer. You would reach and the full $16,640 allowed and you would have some money left in the paycheck.

  12. Richard on December 27th, 2011 1:35 pm

    First, excellent information. I do have a couple of questions. I have a wholly owned C corporation, so I’m the employee and the employer. I’m over 50. I calculate as the employee I can contribute $22,000. As the employer I can match the $22,000. A total of $44,000. Well within the limit. So here’s the questions: Is the employer contribution tax deductible from the corporation’s earnings? What type of red flags would this raise with the IRS if the 22,000 represented 90-100% of my salary?

  13. James on December 28th, 2011 8:57 am

    Great discussions. I may have missed this in the other comments, but my question is one of catch-up. I contributed approximately $14K this year and would like to know what options I have to bridge the gap to max out at $16.5K? Can I take out a Roth or are there any options with my employer? I am assuming I will miss out on my employers match at this point?

  14. David on December 29th, 2011 8:16 am

    Great site, Here is what I am looking at. An employee has exceeded the $245K earnings for the current year, yet he has not fully contributed his $16,500 can he continue to contribute to his fund?

  15. Lori Neal on January 25th, 2012 7:45 am

    Why is everything so confusing? I do payroll for a company of about 310 people and we have quite a few heavy earners ans we are constantly having to undergo 401K census’s and make adjustments on what these earners are able to contribute. The owner and general manager both maxed out there personal contributions and we only match 25 percent of the first 4 percent of the employee contributions and I was told to shut off the contribution because they had reached there max and now no one seems to know what that amount should be. If someone contributed 16500.00 wouldn’t that limit be only $660.00? I know we contributed more than that on their behalf.

  16. Chad on February 14th, 2012 9:48 am

    Clint seems like kind of a dick.

  17. Clint on February 14th, 2012 10:01 am

    Didn’t mean to be a dick, just wasn’t sure how to be any clearer.

  18. Chad on February 16th, 2012 2:02 pm

    Really? How about…

    “You can put in $17,000 pre tax, and your employer can match whatever he wants. As long as the two combined are less than $49K, you’re good to go.”

  19. Clint on February 16th, 2012 2:31 pm

    @Chad Unfortunately, while that’s true most of the the time, it’s not always quite that simple. As in the case of Clifton’s post above, his total compensation is $16,640, which means the total that can be contributed by himself and his employer is $16,640, not the $49K that you quoted. Leaving that out of the answer could potentially lead to someone like Clifton making a major mistake.

  20. Claudia on March 28th, 2012 10:27 am

    I kind of agree with Chad. I just needed a yes or no answer, but instead he had to make it as confusing as possible. Just answer the question yes or no and then explain where there might be exception. People try so hard to make thing sound more difficult and make themselves sound smarter than the rest of us that they waste my time. I don’t appreciate that at all.

  21. Maximo on April 13th, 2012 9:09 am

    Leaving aside highly compensated employees and corporations, for the majority of employees, it is pretty simple, so why are you confused?

    401(k) (pre-tax and Roth if you have that option)=$17000 max for 2012. Employer contributions are not included.

    Yes, with going over the max before the end of the year, one can run into issues (especially with profit sharing and bonuses, something I have only run into just this year with a new company), but other than that is is pretty simple. If you still can’t figure it out, then it is in your best interest to sit down with a financial adviser and hash it out.

    The Roth 401(k) is a huge benefit, getting around the “normal” Roth limitations on income and contribution amount (assuming one starts to get into that “highly compensated” salary range). I am figuring out how to take full advantage of mine now with my new company, based upon what I can afford.

  22. Greg on April 25th, 2012 11:32 am

    Got an employer question. Our safe harbor has the 100% employer match up to 3% of employee pay and 50% employer match for the next 2% of employee pay for a maximum 4% employer safe harbor match. The question is this. For whatever reason, we have employees who elect to have a large percentage of their pay go into their 401K. As an employer, our system is set up to match up to 4% of their biweekly salary [as if the employee is making the same contribution every pay]. What happens when the employee reaches their contribution maximums in September? As an employer, we have been doing the safe harbor match based on 4% of their biweekly pay but now, for the last four months of the plan year (calendar year), there will be no more employee contributions. Do we as an employer have to do a “catch up match” to ensure that at the end of the year, the company has matched 4% of the employees pay?

  23. anotherEvilHRlady on June 6th, 2012 1:54 pm

    @Clint – great site….thank you!

    @Chad and Claudia….there are some things in life that simply can’t be Fisher-Priced!

  24. Ender Berett on July 12th, 2012 7:53 am

    Thank you infinitely for the post! I am just wondering if this could effect a solo 401k or not. Can anyone help me out?

  25. freddycouples on November 22nd, 2012 9:54 am

    Clint – you have the patience of Job. Couldn’t have been clearer to anyone who walks standing up

  26. ibanker on January 7th, 2013 1:54 pm

    Clint – Very clear and easy to follow. Some folks(Chad,Claudia) have difficulty understanding anything with more controls then an on/off switch. Thanks for the clear information. And Chad, grow up. Don’t call someone a name because you can’t understand something.

  27. Mahondune on February 25th, 2013 5:14 pm

    Hi Clint, very insightful… i was mislead by an associate into thinking that the $16,500 limit included my portion (13,500) plus the employer match of approximately $3000 and i was capped out for the year. Your answer cleared that up. My question is, i am considered a highly compensated employee and my company sent me a letter that the max i can contribute is 12% of my compensation in 2013 to the plan. Is this standard across all companies or am i getting hosed? thanks!

  28. Clint on February 25th, 2013 9:05 pm

    Mahondune – The rules for highly compensated employees come from the IRS, so all companies have to comply. To ensure that companies extend their 401k plans to low-paid employees, the IRS requires 401k plans to take a discrimination test (the average contributions of highly compensated employees, as a group, cannot exceed the average contributions of nonhighly compensated employees, as a group, by more than about 2 percent). Most companies pass, but some have to refund or restrict highly compensated employee contributions in order to pass the test. The way to increase your limit is to encourage greater 401k participation by nonhighly compensated employees.

  29. Manoj on February 28th, 2013 6:08 pm

    For 2013 there is limit of 17500.
    1. Is it employee contribution limit?

    And then there is limit of 51000. I believe it is total annual limit of contribution to 401K including employer contribution.

    2. My question is: Is employer contribution tax free? Or is it that any contribution from employer which is over and above total contribution of 17500 is considered an post tax income and is taxable?

  30. Brenda on February 28th, 2013 8:20 pm

    The Fisher-Price comment made me snort out loud! Great job Clint – I got it, but continued to read the comments for the humor.

  31. Pan on March 28th, 2013 8:25 pm

    Very well written. English is my second language and I can clearly and fully understand what you have written. Thanks.

  32. karen on May 9th, 2013 3:00 pm

    I think that the answers are confusing because who is this mystical employer that would contribute over 30,000 dollars in one year to an employee’s 401k fund?

    What the frick?

    If there is a cap, why does it matter where the funds are coming from? Can’t the cap just be the cap and then everyone shut up?

  33. Vinny on October 26th, 2013 8:28 am

    I’m unclear myself on how there is this much confusion over this. I landed on this page from a Google search and started reading. Once I understood how it was being explained, I jumped further down and saw a very simple chart that clearly illustrated the answer in black and white. I had the answer to my question in a minute of finding the site. I’m not sure why everyone is so confused over this. I think Clint illustrated the point in detail and also provided a quick and to the point chart with the answer which was easy to comprehend. Thanks Clint.

  34. Ray T. on November 11th, 2013 12:00 pm

    Ahh, I wished I worked somewhere with a generous a 401k policy you describe. I would have been getting the 200% contribution match for four years now… that would be sweet. Sadly, I have to settle for a lousy 1 to 1 match for the first 3% of my salary. So weak. And this is a Fortune 500, multinational company, with tens of thousands of employees.

  35. Jennifer on March 21st, 2014 9:41 am

    My employer does an AUTOMATIC 4% salary contribution to all employees of the company, whether the employee contributes or not.

    With that said, and with the Max Compensation issue of $250k (+/- depending on the yr), is the maximum the employer would contribe 4% of $250k or a $10,000 contribution in a given year?

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