The IRS places two types of limits on annual contributions to employees' 401( k ): limits on contributions by employees alone, and limits on the combined contributions (employee and employer).
Limits on Employee Contributions
In 2020, the pre-tax maximum annual contribution for employees is:
- $19,500 if under 50.
- $26,000 if over 50.
Employees can contribute as much (or as little) as they want, up to these limits.
If an employee has contributed to any other 401( k ) plan during the year, the employee is responsible for making sure their total 401( k ) contributions do not exceed the IRS limit.
For more information, see IRS 401( k ) Contribution Limits.