Contribution LimitsnnThe IRS determines the employee contribution limit for 401(k) retirement plans annually. These limits can vary based on employee contributions, employer matching contributions, and total contribution amounts.nnThe IRS sets these limits to regulate the maximum amount of money that can be contributed to a 401(k) plan to ensure fair access and prevent excessive tax benefits for high-income individuals.nnEmployee contribution limits are subject to annual adjustments by the IRS. This includes salary deferrals and catch-up contributions for those aged 50 and older.nnContribution limits impact 401(k) plans as well as 403(b) plans and most 457 plans.nnContribution Limits20222023Maximum Salary Deferral$22,500$23,000Catch-up Contributions$7,500$7,500Total Contribution Limit$66,000$69,000Total Contribution Limit + Catch-up Contribution$73,500$76,500nnVesting SchedulesnnVesting schedules dictate when employees fully own employer contributions to their 401(k) accounts. Some plans offer immediate vesting, while others follow a graded or cliff vesting schedule.nnImmediate Vesting: This allows employees to own all employer contributions from the start, giving them complete control over these funds regardless of their tenure with the company.nnGraded Vesting: This plan gradually grants ownership over a specific period, typically in increments, until reaching full ownership after several years of service.nnCliff Vesting: This method involves a sudden transition from no ownership to full ownership after a certain period, often three to five years.nnBy understanding contribution limits and vesting schedules, employees can make informed decisions about their 401(k) plans and maximize their retirement savings potential.