What percentage of my salary should I put in my 401(k)?

At minimum, contribute enough to capture the full employer match. A commonly recommended target is 15% of gross income toward retirement (including employer match). If you're behind on retirement savings, aim for 20–25%. If you're just starting, even 6% (plus match) is a good beginning.

Can I contribute to both a 401(k) and an IRA?

Yes. Contributing to a 401(k) does not prevent you from contributing to an IRA. The accounts have separate limits. However, your ability to deduct Traditional IRA contributions phases out at higher incomes if you're covered by a workplace plan. Roth IRA contributions have income limits but are not affected by 401(k) participation.

What happens to my 401(k) if I leave my job?

You have four options: leave it with your former employer (allowed for balances above $5,000), roll it into your new employer's 401(k), roll it into a Traditional IRA (most flexible and commonly recommended), or cash it out (triggers income tax plus 10% early withdrawal penalty if under 59½ — avoid this).

401(k) Contribution Guide: How Much to Contribute in 2026

2026 401(k) Contribution Limits

Employee contribution limit: $23,500 (up from $23,000 in 2024)
Catch-up contribution (age 50–59 and 64+): Additional $7,500, for a total of $31,000
Super catch-up (age 60–63): Additional $11,250 under SECURE 2.0, for a total of $34,750
Total limit including employer contributions: $70,000 (or 100% of compensation, whichever is less)

These limits apply to traditional 401(k)s, Roth 401(k)s, and SIMPLE 401(k)s. Contributions to a 403(b) or 457(b) plan follow the same limits.

Always Capture the Full Employer Match First

If your employer offers a match, this is the highest-return investment available to you — it's an instant 50–100% return. A common match is "50% of contributions up to 6% of salary." For a $70,000 salary, that means contributing 6% ($4,200) earns an employer match of $2,100 — a guaranteed 50% return before any market gains.

Never leave employer match on the table. This is the single most universally agreed-upon financial advice: contribute at least enough to capture the full match before doing anything else with your money.

Vesting Schedules

Your own contributions are always 100% yours immediately. Employer contributions, however, may be subject to a vesting schedule — meaning you only keep them if you stay long enough:

Immediate vesting: Employer match is yours from day one
Cliff vesting: 0% for 1–2 years, then 100% (e.g., must stay 3 years)
Graded vesting: 20% per year over 5 years (common IRS maximum)

If you're considering leaving a job, know your vesting date — it may be worth staying a few more months to fully vest employer contributions.

Traditional 401(k) vs Roth 401(k)

Traditional 401(k): Contributions are pre-tax (reduces your current taxable income). Withdrawals in retirement are taxed as ordinary income. Best for high earners who will be in a lower tax bracket in retirement.
Roth 401(k): Contributions are after-tax (no current tax deduction). Withdrawals in retirement are completely tax-free. Best for younger workers or those who expect higher taxes in retirement. No income limits (unlike Roth IRA).

Investment Allocation Within Your 401(k)

Most 401(k)s offer limited investment options. Key principles: choose low-cost index funds (expense ratios below 0.20%), avoid company stock concentration (generally keep below 5–10% in your employer's stock), and use a target-date fund only if other options are expensive.