Question 1

How much should I contribute to my 401(k)?

Accepted Answer

At minimum, contribute enough to capture your full employer match — that's a 50–100% immediate return. Beyond that, the IRS limit for 2025 is $23,500 ($31,000 if you're 50+). Most financial advisors recommend saving 15% of gross income for retirement total across all accounts, including employer match.

Question 2

What are the 2025 401(k) contribution limits?

Accepted Answer

For 2025, the employee contribution limit is $23,500 (up from $23,000 in 2024). Workers aged 50+ can contribute an additional $7,500 catch-up for a total of $31,000. The total combined limit (employee + employer contributions) is $70,000. These limits apply per person, per plan, per year.

Question 3

How does employer matching work?

Accepted Answer

A common match is '100% up to 3% of salary' — meaning if you contribute 3% of your $60,000 salary ($1,800), your employer adds $1,800 (100%). Some employers offer tiered matching: 100% on the first 3%, then 50% on the next 2%. Always contribute enough to get the full match — it's the best guaranteed return available.

Question 4

Traditional 401(k) vs Roth 401(k): which is better?

Accepted Answer

Traditional 401(k): contributions reduce taxable income now; withdrawals are taxed in retirement. Roth 401(k): contributions are after-tax; withdrawals in retirement are tax-free. Generally, traditional is better if you're in a high tax bracket now; Roth is better if you expect to be in a higher bracket in retirement, or if you're early in your career with room to grow income.

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