It is fairly common knowledge that a person is limited in the amount they can contribute to a work retirement plan. In 2021, this amount is $19,500 for individuals and $26,500 for those over 50 years old. This total can be split up between Pre-Tax 401k and Roth 401k if your plan allows.
It is far less common knowledge that you are actually allowed up to $58,000 in annual contributions to defined contribution plans.
Here is how.
Let us say you are under 50 and your contribute the full $19,500 to your 401k. Let us also say you have a generous employer who matches and provides $6,500 in employer contribution. This total is now $26,000 to your retirement.
Depending on your plan, you may also be eligible for After Tax contributions. These are similar to Roth but different in that they are in excess of your deferral amount. In the above scenario, you could contribute and additional $32,000!
Whether or not your plan allows and whether it makes sense to you is a conversation worth having. Please reach out if I can help you through it.
To your financial future,
-Alex Orlando