What is the maximum annual contribution for an employee to a 401(k) plan as of 2023?

The maximum annual contribution limit for employees participating in a 401(k) plan in 2023 is $22,500. However, the choice provided indicates $20,500, which was the limit for the previous year, 2022.

For individuals under the age of 50, the primary contribution limit is set by the IRS for the year in question. The figures may change yearly based on inflation and cost-of-living adjustments. If someone over the age of 50 is contributing to a 401(k), they can take advantage of a catch-up contribution, which allows an additional amount to be contributed, raising their total contribution limit.

This detail about catch-up contributions is key for understanding retirement savings, especially for individuals close to retirement age who may want to bolster their savings.

Given this context, focusing specifically on the maximum contributions ensures clarity about current regulations allows for better financial planning and decision-making.