Similar but not exactly the same. The Traditional IRS is something you set up and if you have earned income you are allowed to contribute a maximum amount each year. A 401(k) is set up by an employer and has a higher limit allowed for contributions.
For 2022, 2021, 2020 and 2019, the total contributions you make each year to all of your Traditional IRAs and Roth IRAs can't be more than:
- $6,000 ($7,000 if you're age 50 or older), or
- If less, your taxable compensation for the year (earned income)
Deferral limits for 401(k) plans
The limit on employee elective deferrals (for traditional and safe harbor plans) is:
- $20,500 in 2022 ($19,500 in 2021 and 2020; and $19,000 in 2019), subject to cost of living adjustments
Generally, you aggregate all elective deferrals you made to all plans in which you participate to determine if you have exceeded these limits. If a plan participant’s elective deferrals are more than the annual limit, find out how you can correct this plan mistake.
And Yes, you can contribute to both a 401(k) and an IRA, if your income does not exceed the IRS limits.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
