What Is the 22500 Contribution Limit?
Understand how various IRS rules govern retirement plan savings, from personal deferral ceilings to the overall limits on total annual additions.
The “$22,500 contribution limit” was the Internal Revenue Service (IRS) ceiling on employee contributions to certain retirement plans for the 2023 tax year. This figure is not static and is adjusted periodically by the IRS to account for cost-of-living changes.
Understanding the Employee Elective Deferral Limit
The employee elective deferral limit was $22,500 for the 2023 tax year. It increased to $23,000 for 2024 and is $23,500 for 2025. This limit, governed by Internal Revenue Code Section 402(g), applies to contributions an employee makes from their salary to plans like 401(k)s, 403(b)s, most 457 plans, and the federal Thrift Savings Plan (TSP).
The limit pertains only to an employee’s elective deferrals and includes both traditional (pre-tax) and Roth (after-tax) amounts. It does not include employer contributions, which are subject to a separate overall limit. This ceiling is applied per-individual, not per-plan.
For instance, if an employee works for two companies in 2025, their total contributions across both 401(k) plans cannot exceed $23,500. This personal limit is also separate from contribution limits for Individual Retirement Arrangements (IRAs).
Catch-Up Contributions for Individuals Age 50 and Over
Tax law allows for additional “catch-up” contributions for those age 50 and older. For 2025, this amount is $7,500, and an individual is eligible for the entire calendar year in which they turn 50. For instance, in 2025, a 55-year-old can contribute the base limit of $23,500 plus the $7,500 catch-up, for a total of $31,000. These contributions are permitted only after an employee reaches the regular elective deferral limit.
The SECURE 2.0 Act introduced new rules for these contributions. Beginning in 2026, high-income earners with FICA wages over $145,000 in the prior year must make catch-up contributions on a Roth (after-tax) basis. Starting in 2025, a “super catch-up” increases the contribution amount for individuals aged 60 through 63 to $11,250.
The Overall Contribution Limit
Separate from the employee-only deferral limit is a broader ceiling on total annual additions to a retirement account, known as the Section 415 limit. For 2025, this overall limit is $70,000 or 100% of the employee’s compensation, whichever is less. This cap includes the sum of all contributions to a participant’s account from all sources: employee elective deferrals, employer matching contributions, and other employer contributions like profit sharing.
Catch-up contributions made by employees age 50 and over do not count against this limit. For example, an employee under 50 who contributes $23,500 to their 401(k) in 2025 and receives a $10,000 employer match and a $5,000 profit-sharing contribution has a total annual addition of $38,500. This amount is well below the $70,000 overall limit.
Correcting Excess Contributions
An excess contribution occurs when an employee’s elective deferrals exceed their personal limit for the year. If uncorrected, the excess amount is taxed twice: once in the year it was contributed and again when distributed from the plan. The employee must identify the excess, which often happens when changing jobs, and notify their plan administrator to request a corrective distribution.
The plan must then distribute the excess contribution, plus any investment earnings, back to the employee. This corrective distribution must be completed by April 15 of the following year, a deadline not affected by personal tax filing extensions. When corrected on time, the excess contribution is included in the employee’s taxable income for the year it was made, while any earnings on that excess are taxed in the year they are distributed.