In 2022 and 2023, the Individual 401(k) Contribution Limit is $61,000 and $66,000, respectively. For individuals who are 50 or older, a catch-up contribution is available in 2022, allowing an additional $6,500 to be contributed, and $7,500 in 2023.
There are different regulations for the Individual 401(k) contributions, therefore you should see yourself as both an employer and an employee . Your contributions are subject to additional limits in each of these functions under the overall $61,000 contribution limit set in 2022 by the IRS.
- If your contribution is less than $20,500 in 2022, $22,500 in 2023, then you can contribute 100% of your salary/compensation as a contribution. Contributions for people over 50 will increase these limits by $7,500 in 2023 and $6,500 in 2022.
- You then also have the option to contribute an additional 25% of your business income, or your net self-employment income (defined as your net profit less the self-employment tax you paid on half of it and the plan contributions you made for yourself), as the employer. Your contributions are bound the total plan contribution limit at $61,000 for 2022 and $66,000 for 2023.
Keep in mind that employee 401(k) restrictions apply by person, not by plan, so if you have a separate side business or W-2 job please take note. In other words, if you participate in a traditional 401(k) at your day job as well, the employee contribution limits apply to contributions made to all plans rather than just one particular plan.
IRS Website: One Participant 401(k) Plans