I realized I don't fully understand something. It almost embarrassing to admit.

In 2016 we have 18k max contribution limit for 401k. Does this mean that employee can contribute at most 18k or that total contributions made on behalf of employee should not exceed 18k (company match)

To make is simple, if you make 100k, by contributing 18% you got your limit. But if your company matches 5%, actual contributions will be 18.9k. In the above example, if one wants to maximize benefit should one contribute 18% or less?

1 Answer 1


The $18K is for employee deferral only. The total limit, that includes employer matching and after-tax contributions, is $52K (for 2015). So if you want to maximize the match - you should contribute the whole $18000.

See the details on this IRS page.

  • 3
    I'd add - If the company matched the first 5% dollar for dollar, it's not 5% of 18K, it's 5% of the $100K, i.e. your 5% of income is matched. Commented Jan 18, 2016 at 3:18
  • Note that if you make 100 k$, you might come into the HCE range ('Highly Compensated Employee'), where the limit is not 18K, but 10% (which makes only 10k for 100k salary). This is a bitch of a law. Your company must tell you that; if they don't say anything, you are good.
    – Aganju
    Commented Jan 19, 2016 at 1:13
  • @Aganju HCE is a relative term, not absolute. Doesn't always mean you only have 10% of the salary if you're above the 100K limit, it depends on how many other employees participate.
    – littleadv
    Commented Jan 19, 2016 at 1:32
  • ok, but it is still a bitch when it hits you. Only 10k instead of 17.5$ allowed is just ugly. I hope it doesn't hit others. - P.S.: When I asked HR about it, they offered to reduce my salary. Har, har.
    – Aganju
    Commented Jan 19, 2016 at 1:34

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