401k contribution limits employer match refers back to the most amount of cash that staff can contribute to their 401k retirement accounts every year. Employers are additionally allowed to make matching contributions, as much as a sure restrict. For 2023, the 401k contribution restrict is $22,500, and the employer match restrict is $66,000. Understanding these limits is vital for workers who’re planning for his or her retirement.
There are a number of advantages to saving for retirement in a 401k account. First, contributions are made on a pre-tax foundation. Because of this staff cut back their present taxable revenue by the quantity they contribute to their 401k, which can lead to vital tax financial savings. Second, 401k accounts develop tax-deferred. Because of this the earnings on the investments within the account aren’t taxed till they’re withdrawn in retirement. Third, many employers supply matching contributions to their staff’ 401k accounts. This may be an effective way to save lots of much more cash for retirement.
