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Know exactly how much you can shelter from taxes each year.
| Account | Under 50 | Age 50–59 / 64+ | Age 60–63 |
|---|---|---|---|
| 401(k) / 403(b) | $23,500 | $31,000 | $34,750 |
| Roth IRA | $7,000 | $8,000 | $8,000 |
| Traditional IRA | $7,000 | $8,000 | $8,000 |
| Max possible total* | $30,500 | $39,000 | $42,750 |
* 401(k) + one IRA (Roth or Traditional — the $7,000/$8,000 limit is shared between them).
You can have both a Roth IRA and a Traditional IRA, but your total contributions across both cannot exceed $7,000 ($8,000 if 50+) per year.
You have until April 15 of the following year to make IRA contributions for the current tax year. 401(k) contributions must be made within the calendar year.
Your $23,500 401(k) limit is just your contributions. Employer matching is on top of that — the total combined limit (your money + employer money) is $70,000 in 2025.
Contributing more than the IRS limit triggers a 6% excise tax on the excess amount for every year it stays in the account. Fix it before the tax deadline.
Not sure where to put your money first? Follow this priority order to get the most out of every dollar you save.
Always contribute at least enough to get the full employer match. This is an instant 50%–100% return — nothing beats it.
If your employer matches 100% up to 4% of salary, contribute at least 4%.
After capturing the match, fill your Roth IRA next. Tax-free growth is extremely valuable, especially for younger savers.
Contribute $583/month to hit the $7,000 annual limit.
Once the Roth IRA is maxed, go back and increase your 401(k) contributions toward the full $23,500 limit.
That's ~$1,958/month beyond what you're already contributing for the match.
Still have money to invest? Open a taxable brokerage account. No contribution limits, but no special tax advantages either.
Good for goals before retirement age or if you've maxed all tax-advantaged options.
Key Insight
Set up automatic monthly contributions to your IRA as soon as January 1. Spreading $7,000 across 12 months is just $583/month — much more manageable than scrambling to deposit a lump sum before the April deadline.
The maximum amount the IRS allows you to put into a retirement account in a given tax year. Exceeding this limit results in a 6% excise tax penalty.
An additional amount savers age 50 and older (or 60–63 for 401(k)s) can contribute beyond the standard annual limit.
The $7,000 annual limit applies across ALL your IRAs combined — Roth and Traditional together, not each separately.
The portion of your 401(k) contribution that comes from your own paycheck. This is separate from any employer match.
Quick Summary