If you’re on track to max out your 401(k) plan for 2023 and want to save more, your plan may have another option: after-tax contributions.
For 2023, you can defer up to $22,500 into your 401(k), and savers age 50 and older can add another $7,500. Some plans allow even more through after-tax 401(k) contributions.
Keep in mind, the total plan limit for 2023 is $66,000, which includes your deferrals, the company match, profit sharing and other deposits from your employer.
An estimated 14% of employees maxed out 401(k) plans in 2021, according to Vanguard, based on 1,700 plans and nearly 5 million participants.
After-tax 401(k) contributions may be worth considering if you’re a higher earner looking for more ways to save, explained Ashton Lawrence, a certified financial planner and partner at Goldfinch Wealth Management in Greenville, South Carolina.