401k Contribution Limits for Married Filing Jointly

A 401(k) plan is a common employer-sponsored retirement savings account that allows employees to invest a portion of their paycheck, often with a company contribution. These plans provide a tax-advantaged way to build a nest egg for the future. For married couples who file their taxes jointly, understanding how the contribution rules apply is a frequent point of confusion. This article clarifies the contribution limits and regulations for married individuals, explaining how each spouse can maximize their savings.

Individual Employee Contribution Limits

The foundation of 401(k) savings is the individual employee contribution limit, which applies to each person separately, not to the married couple as a unit. For the 2025 tax year, an individual can contribute up to $23,500 from their salary into their 401(k) plan. This is often referred to as an elective deferral and the limit is set under Internal Revenue Code Section 402.

Individuals who are age 50 or over at any point during the calendar year are permitted to make an additional “catch-up” contribution. For 2025, this catch-up amount is $7,500. A new provision effective in 2025 also allows for an even higher catch-up amount of $11,250 for individuals who are ages 60, 61, 62, or 63, if their plan document allows for it.

A key point for married couples is that these limits are applied on a per-person basis. A joint tax return does not create a shared 401(k) limit. If both spouses have access to a 401(k) plan through their respective employers, each one has their own individual contribution limit. For example, if both spouses are under age 50, they can each contribute up to $23,500 to their own 401(k) for a potential household total of $47,000 in 2025.

This individual limit is a combined cap for all of an employee’s personal contributions, whether they are made to a traditional pre-tax 401(k) or a Roth 401(k). If an employee contributes to both types, the total cannot exceed their personal limit. Furthermore, if an individual works for more than one employer during the year, their personal contribution limit applies to the total amount deferred across all plans combined.

The Overall Contribution Limit

Beyond the amount an employee can personally defer, a separate, higher limit governs the total money that can be added to their 401(k) from all sources within a single year. This is known as the “annual additions” limit, defined under Internal Revenue Code Section 415. For the 2025 tax year, this overall limit is $70,000.

This overall limit is a sum of several components. It includes the employee’s own elective deferrals, any applicable catch-up amounts, any matching contributions made by the employer, and any other employer contributions, such as profit-sharing. The total of these combined additions for the year cannot exceed the $70,000 threshold or 100% of the participant’s compensation, whichever is less.

To illustrate, consider an employee under age 50 who contributes the maximum $23,500 to their 401(k) in 2025. Their employer provides a matching contribution of $10,000 and a profit-sharing contribution of $5,000. The total annual addition to this employee’s account would be $38,500 ($23,500 + $10,000 + $5,000), which is well below the $70,000 overall limit.

Correcting Excess Contributions

Exceeding the individual employee contribution limit, known as an “excess deferral,” can lead to negative tax consequences if not handled correctly. This situation most commonly arises when an individual changes jobs mid-year and contributes to the 401(k) plans of both the old and new employers.

The primary consequence of failing to correct an excess deferral is double taxation. The excess amount is taxed in the year it was contributed because it was not properly excluded from income, and it will be taxed again when it is eventually distributed from the plan in retirement.

To fix the error, the employee must identify the excess amount and notify their plan administrator. This notification must occur before the tax filing deadline of the year following the contribution, which is typically April 15. An extension to file one’s personal income tax return does not extend this deadline for correcting an excess deferral.

Once notified, the plan is required to distribute the excess contribution, along with any investment earnings it generated, back to the employee. The principal amount of the excess deferral is included in the employee’s taxable income for the year it was originally contributed. The earnings associated with that excess, however, are taxable in the year they are distributed to the employee. The plan will issue a Form 1099-R to report the distribution to the IRS.