Employee Contributions

You may elect to contribute 1% to 50% of your eligible base salary, commissions and bonus up to IRS limits every year.

2023 IRS Limits on Pre-Tax or Roth Post-Tax Contributions

  • $22,500 if you are younger than age 50 in 2023
  • $30,000 if you are age 50 or older in 2023

You can make pre-tax, Roth post-tax or a combination of contributions. Your combined total contributions cannot exceed annual IRS contribution limits.

Pre-Tax Contributions

When you contribute on a pre-tax basis, you get a tax break when contributions are made, but you will have to pay taxes when you take the money out in retirement. This makes sense if you expect to be in a lower tax bracket when you retire.

Roth Post-Tax Contributions

The Roth feature means you can contribute post-tax dollars into the plan, so you won’t have to pay taxes on these contributions when you take a qualified distribution.

When you contribute to a traditional 401(k), you’re contributing on a pre-tax basis, meaning you get a tax break upfront but have to pay taxes when you take the money out in retirement. With a Roth account, you contribute post-tax dollars, and the money you contribute, including earnings if you hold the account for at least five years and don’t withdraw the money until at least age 59½, comes out tax-free in retirement.

You may want to take advantage of the Roth feature if you:

  • Are young and have decades of potential tax-free compounding of earnings.
  • Are in a lower tax bracket now than what you expect after retirement, which might mean you pay less in taxes overall.
  • Plan to leave your Roth to a spouse or heirs who can stretch out the tax-free growth.