Here's How Much You Can Put Into a Retirement Account

How Much You're Allowed to Save for the Current Tax Year

Senior couple looking out to sea

David Lees / Iconica / Getty Images

There are a handful of different accounts that help you save for retirement, and they all offer tax benefits to incentivize savings. Regardless of which type of retirement account you choose, the fastest way to grow your nest egg is to contribute as much as possible every year.

The Internal Revenue Service (IRS) contribution limits for 401(k) and IRA accounts are indexed to inflation, so they increase every year or so.

It's important to know how much you can contribute every year so that you can make sufficient progress toward your retirement savings goals. Here's how much you can put into popular retirement accounts this year.

Key Takeaways

  • Each year, the IRS adjusts the amount you can put into a 401(k) or IRA based on inflation.
  • Employers often will match how much you contribute—up to the legal limits.
  • People 50 and older can put even more into a 401(k) or IRA to catch up on their retirement saving.

401(k) Contribution Limits

Perhaps the most popular​ retirement account is the 401(k) plan. Many employers who offer these work-sponsored plans will match a certain percentage of employee contributions. For example, an employer that matches up to 4% of contributions effectively allows an employee to save 8% of every paycheck for half of the out-of-pocket cost.

Money is often contributed to a 401(k) plan before taxes are deducted from your paycheck, so you’ll pay taxes years down the road when you withdraw that money.


The 2021 contribution limit for your 401(k)s is $19,500. In 2022, this limit increases to $20,500. Those 50 or older can contribute an additional $6,500.

Pre-tax contributions are beneficial because they lower your taxable income and allow you to build the value of your 401(k) account more quickly. For example, an employee who earns $50,000 annually and contributes 5% of their income to a 401(k) will end up contributing $2,500 to their retirement account throughout the year, lowering their taxable income by that same amount.

If you’re self-employed and your business has no common-law employees other than your spouse, you can set up an individual 401(k) for yourself, sometimes referred to as a solo 401(k). You have a choice of contributing either pre-tax dollars or after-tax dollars to a solo 401(k). If you want to contribute after-tax dollars, your account will be called a Roth 401(k). Since you already have paid income tax on the money being contributed, you won’t have to pay taxes when you withdraw the money in retirement.

IRA Contribution Limits

There are four main types of Individual Retirement Accounts (IRAs): a SIMPLE IRA, SEP-IRA, traditional IRA, and Roth IRA.


Anytime you hear the word “Roth,” it indicates after-tax dollars.

Traditional IRAs are funded with pre-tax dollars, while Roth IRAs are funded with after-tax money. You’re allowed to contribute a maximum of $6,000 in 2021 and 2022 to your traditional IRA and Roth IRA accounts. For people with both accounts, that limit applies to your total annual contributions across both accounts. If you’re 50 or older, you can chip in an extra $1,000 on top of that limit.

For example:

  • If Sally, 25, contributes $6,000 to her Roth IRA, she is not allowed to contribute anything to her traditional IRA in that same year.
  • John, 57, could contribute $2,500 to his Roth IRA and $4,500 to his traditional IRA.
  • Benny, 44, could contribute $5,999 to his Roth IRA and $1 to his traditional IRA.

Maximum contributions to Roth IRAs also vary by income level. The $6,000 contribution limit applies to anyone with a modified AGI of less than $125,000 ($198,000 for married couples) in 2021. This limit increases to $129,000 ($204,000 for married couples) in 2022.

People who earn $125,000 in 2021 ($129,000 in 2022) or more have their contribution limits reduced. Once someone earns $140,000 in 2021 ($208,000 for married couples) or $144,000 in 2022 ($214,000 for married couples), they are no longer eligible to make any Roth IRA contributions.

You can establish traditional or Roth IRAs by yourself, but only your employer can set up an SEP-IRA for you.


SEP stands for "simplified employee pension." SEP-IRAs are typically used by self-employed individuals or small business owners.

Employers contributions to an SEP-IRA cannot exceed the lesser of 25% of an employee's wages or $58,000 in 2021 ($61,000 in 2022).

SIMPLE IRAs are designed for small businesses with 100 or fewer employees. SIMPLE stands for "savings incentive match plan for employees" and contributions are made with pre-tax dollars. The contribution limit for 2021 is $13,500; this increases to $14,000 in 2022. Investors 50 or older can contribute up to an additional $3,000.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Internal Revenue Service. "IRS Announces 401(k) Limit Increases to $20,500."

  2. Internal Revenue Service. "IRA Contribution Limits."

  3. Internal Revenue Service. "SEP Contribution Limits (including grandfathered SARSEPs)."

  4. Internal Revenue Service. "SIMPLE IRA Plan."

  5. Internal Revenue Service. "Retirement Topics - SIMPLE IRA Contribution Limits."

Related Articles