The maximum you can contribute to your 401(k) increased significantly for 2023. Below are the 2022 and 2023 amounts:
Year 2022 2023
standard maximum $20,500 $22,500
Extra if over age 50 $6,500 $7,500
Total if over age 50 $27,000 $30,000
This is most important for people who try to save a specific dollar amount every month in order to hit the maximum by the end of the year. If that is you, then consider increasing the amount each paycheck. For example, in 2022 for someone over age 50 it would take $2,250 per month to hit the maximum of $27,000. With the 2023 increase, this person could now save $2,500 per month to get to the maximum of $30,000.
These maximums have nothing to do with company contributions like matching and profit sharing. Those amounts can go in on top of the maximums listed above. The maximums we are discussing in this post only apply to what you can save from you own paycheck.
Also keep in mind that if you are a highly compensated individual (made more than $135,000 in 2022) AND your plan is not a “safe-harbor” plan, there is a possibility there could be other restrictions on the amount you can contribute. If this might be you, be sure to ask your company if your plan is a “safe-harbor” plan.