10/31/2026
Can you contribute TOO MUCH to your 401(k)?
This was brought up in a recent client meeting. Saving for retirement is a great thing! But if you're a high-income earner contributing a set percentage of your paycheck to your 401(k), there's something you need to watch out for!
The IRS sets annual limits on how much you can contribute.
For 2026, the employee contribution limit is $24,500 under age 50. Workers age 50+ can make additional catch-up contributions that depend on your age.
Here's where it gets interesting.
Let's say you earn $200,000 a year and contribute 15% of your salary to your 401(k). That's $30,000 a year!
But because of the IRS limit, you could max out your 401(k) before the year ends. Your payroll contributions may stop, leaving you with several paychecks where you're no longer contributing.
Why does that matter?
Depending on your employer's plan, you could miss out on some employer matching contributions if the match is calculated each paycheck and the plan doesn't offer a year-end “true-up.”
And if you participate in multiple workplace retirement plans, you may need to keep track of your contributions across those plans, too.
The bottom line: Don't just set your 401(k) contribution percentage and forget about it!
Know your annual contribution limit.
Review your year-to-date contributions.
Understand how your employer calculates its match.
Revisit your contribution percentage when your salary increases.
A little planning can help you make the most of your retirement savings AND your employer's benefits!
