The $72,000 401(k) cap is not your employer's match limit

There is no federal line labeled “401(k) employer match limit.” There are three lines that can stop a match, and they answer different questions.

The first line belongs to the plan. An employer might match 50 percent of employee deferrals up to 6 percent of compensation, dollar for dollar up to 4 percent, or under another formula written into the plan. That formula usually produces the lowest ceiling.

The second line limits the compensation the plan may count. For 2026, that figure is $360,000. The third limits total annual additions to an account to the lesser of 100 percent of compensation or $72,000. Total additions include much more than the match.

The employee's $24,500 elective-deferral limit sits alongside those rules. It does not absorb employer dollars. It can still matter because an employee contribution usually triggers the match.

That is the part most explanations flatten. They quote $72,000, subtract $24,500 and call the $47,500 remainder an employer-match limit. The subtraction is correct. The label is not. That remainder can also hold employee after-tax contributions, profit-sharing contributions, other employer money and forfeiture allocations, and the plan need not offer any of those features.

What is the 401(k) employer match limit for 2026?

There is no separate federal employer-match limit for 2026. A match is bounded first by the plan's formula, then by the $360,000 compensation limit, and finally by the $72,000 limit on total annual additions. The employee's $24,500 elective-deferral cap is separate from employer contributions.

The governing dollar figures appear together in IRS Notice 2025-67. The notice number reflects the year it was issued. Its heading says “2026 Amounts Relating to Retirement Plans and IRAs,” and the adjustments took effect January 1, 2026.

2026 rule	Amount	What it limits
Employee elective deferrals under section 402(g)	$24,500	Regular pre-tax and Roth salary deferrals across the employee's covered plans
Countable compensation under section 401(a)(17)	$360,000	Compensation a qualified plan generally may use to determine contributions and benefits
Annual additions under section 415(c)	$72,000	Employee deferrals, employer match, other employer contributions, employee after-tax contributions and forfeiture allocations

The IRS also permits an $8,000 catch-up contribution for participants age 50 or older in 2026. The higher catch-up for a participant who is age 60, 61, 62 or 63 remains $11,250. Catch-up contributions sit outside the $72,000 annual-additions limit, which is why the IRS contribution-limits page shows totals of $80,000 or as much as $83,250 for eligible participants.

None of those numbers promises an employer contribution. A plan can provide no match. A plan can set a formula far below the statutory ceilings. It can also make a nonelective contribution that does not depend on an employee deferral, which is employer money but is not a match.

How does the plan formula set the first ceiling?

The plan formula states the match rate, the employee contribution that qualifies, and the compensation to which the formula applies. “50 percent up to 6 percent” produces a maximum match equal to 3 percent of eligible compensation. It does not produce a 6 percent employer contribution.

The IRS gives the same construction on its matching-contributions page. Under a formula matching 50 percent of contributions up to 5 percent of salary, an employee earning $30,000 who contributes $2,000 receives a $750 match. The eligible contribution is capped at $1,500, then multiplied by 50 percent.

The distinction is easier to see when the formula is written as arithmetic:

match = match rate × lesser of employee deferral or formula limit

For a formula of 50 percent on the first 6 percent of pay, a $100,000 salary and a deferral of at least $6,000 produce a $3,000 match. A deferral of $4,000 produces $2,000. Contributions above $6,000 do not earn more under that formula.

Real plans do not converge on one standard sentence. The Paychex, Inc. 401(k) Incentive Retirement Plan filing says the 2025 formula matched 100 percent of the first 3 percent of eligible pay and 50 percent of the next 2 percent, for a maximum match of 4 percent. Effective January 1, 2026, it changed to 100 percent of the first 4 percent. The maximum stayed at 4 percent, but the employee contribution needed to collect it fell from 5 percent to 4 percent.

The Artesian 401(k) Retirement Plan filing uses another formula: 50 percent of each employee dollar up to 6 percent of compensation. Its maximum match is 3 percent of compensation.

Both are legitimate 401(k) matches. Neither can be reconstructed from the federal dollar limits alone.

How does the $360,000 compensation limit cap a match?

Section 401(a)(17) limits compensation counted by a qualified plan to $360,000 in 2026. Once countable compensation reaches that figure, a percentage-based match generally stops rising. A 4 percent maximum formula therefore reaches $14,400, while a 3 percent maximum formula reaches $10,800, before any narrower plan terms apply.

This is the ceiling that disappears when an explainer jumps from a percentage formula to the $72,000 total. The formula works on compensation, and the compensation input has its own cap.

The following amounts are Money & World calculations from the statutory compensation limit. They assume the plan uses the full $360,000, defines all of it as eligible compensation and imposes no lower dollar ceiling.

Match formula	Maximum employer rate	Match at $100,000 of eligible pay	Match at the $360,000 compensation ceiling
100% of the first 4%	4%	$4,000	$14,400
50% of the first 6%	3%	$3,000	$10,800
100% of the first 3%, plus 50% of the next 2%	4%	$4,000	$14,400

A salary above $360,000 does not automatically raise those figures. More important, “salary” and “eligible compensation” may not be the same number. A plan can include or exclude bonuses, commissions, overtime and other categories according to its document, subject to the tax rules.

The IRS calls the definition of compensation a common source of matching errors. Its 401(k) matching-contribution Fix-It Guide directs plan sponsors to compare the compensation used in payroll with the definition in the plan document. A payroll system that omits compensation the document includes can underpay the match even when every federal ceiling is observed.

Does the $24,500 employee limit include the employer match?

No. The $24,500 section 402(g) limit applies to an employee's regular elective deferrals in 2026. Employer matching contributions do not reduce that amount. The match counts instead toward the separate $72,000 annual-additions limit, along with the employee deferrals and other account contributions.

The separation produces two different aggregation rules. The $24,500 employee limit generally follows the person across 401(k), 403(b), SARSEP and certain other elective deferrals. Moving between jobs does not create a fresh employee-deferral allowance.

The section 415(c) limit generally applies to accounts in plans maintained by one employer and related employers. The IRS illustrates the distinction with an employee who also has an unrelated self-employed business. The person's elective deferrals across the two plans share one section 402(g) ceiling, while each unrelated employer's plan can have its own section 415(c) limit.

That rule does not turn every unused dollar below $72,000 into match. Consider the Paychex formula using the full compensation ceiling. A participant who defers $24,500 and receives the calculated $14,400 maximum match has $38,900 of annual additions. The arithmetic leaves $33,100 below the federal total. Whether any of that space can be used depends on features such as employee after-tax contributions or additional employer contributions in the plan.

The plan can also match a narrower category than all employee contributions. The Paychex filing says catch-up contributions enter its match calculation only when regular contributions are below the allowable percentage of eligible pay. Another plan may treat catch-up or employee after-tax contributions differently. “Employer match does not count toward $24,500” is a federal rule. “Every employee contribution earns a match” is not.

When does the $72,000 total-additions limit become binding?

The $72,000 limit binds when all non-catch-up additions to the account reach that amount. It includes regular elective deferrals, employer matching and nonelective contributions, employee after-tax contributions, and allocated forfeitures. A match by itself usually reaches the limit only under an unusually large formula or alongside other contributions.

The list matters because “employee plus employer” is still incomplete. Employee after-tax contributions are employee money but are not part of the $24,500 elective-deferral limit. Forfeitures may be employer money left behind by former participants and reallocated under the plan. Both can occupy section 415(c) space.

Three examples show how the total behaves. These are arithmetic, not descriptions of any one plan:

1. An employee defers $24,500 and receives a $6,000 match. Annual additions are $30,500, leaving $41,500 below the federal ceiling.
2. An employee defers $24,500, receives a $14,400 match and makes $20,000 of permitted employee after-tax contributions. Annual additions are $58,900, leaving $13,100.
3. An employee defers $24,500, receives a $14,400 match, makes $30,000 of employee after-tax contributions and receives $5,000 of other employer contributions. The uncapped sum is $73,900, so the plan cannot leave the full amount as regular annual additions for that limitation year.

The lower branch of section 415(c) also matters. The limit is the lesser of $72,000 or 100 percent of participant compensation. A worker with $50,000 of compensation has a $50,000 annual-additions ceiling even though the national dollar figure is higher.

Catch-up contributions are excluded from annual additions. That exclusion does not mean every participant age 50 or older can automatically contribute $80,000. The plan must permit catch-ups, the participant must have reached an applicable regular limit, and the plan's own contribution features still control the rest of the account.

Can reaching the employee limit early reduce the match?

Yes, when a plan calculates the match by payroll period and provides no annual true-up. If employee deferrals stop after the $24,500 limit is reached, later paychecks can carry no deferral to match. A plan using an annual computation period can reconcile the difference after year-end. The document decides.

Take a hypothetical employee earning $120,000 in equal monthly installments under a dollar-for-dollar match on the first 4 percent of each month's pay. The monthly maximum match is $400. If the employee contributes through all 12 months, the annual match reaches $4,800.

If contributions are concentrated into the first six months and then stop, a payroll-period formula without a true-up produces six $400 matches, or $2,400. The employee may still have contributed the same annual amount. The missing $2,400 comes from six later pay periods with no matched deferral, not from either federal dollar ceiling.

An annual formula changes the result. It compares full-year deferrals with full-year eligible compensation and can require the employer to add the shortfall. The IRS Fix-It Guide warns that a plan described in annual terms may be operated incorrectly if the administrator calculates only by payroll period and never reconciles the year.

This is why “4 percent match” remains incomplete. It can mean 4 percent of each pay period, 4 percent of annual compensation with periodic funding, or another computation written into the plan. The percentage is one term. The computation period is another.

What do filed plan records reveal about employer contributions?

Filed records separate the match formula from the account's total employer money. Artesian's plan matched 50 percent up to 6 percent of compensation, yet its Form 5500 reported $1,321,448 of employer contributions. The audited notes show matching, discretionary and service contributions, plus forfeitures that reduced the sponsor's obligation.

The Department of Labor's 2025 Form 5500 data identifies the Artesian plan and its Schedule H. That schedule reports $1,321,448 of employer contributions and $2,372,905 of participant contributions for the year.

The SEC-filed audited notes provide the categories behind the employer number. Artesian reported approximately $735,000 of matching contributions, $519,000 of discretionary quarterly contributions and $190,000 of service contributions. It also reported that about $123,000 of forfeitures reduced the plan sponsor's contribution obligations.

The rounded reconciliation is direct:

$735,000 + $519,000 + $190,000 - $123,000 = $1,321,000

That is within $448 of the exact Schedule H figure because the audited components are stated in thousands. The result does not imply that the plan offered a $1.32m match. It shows the opposite. “Employer contributions” on Form 5500 combine categories, while the plan's 50 percent on 6 percent formula determines the individual match.

The same distinction appears in the Paychex filing. Its 4 percent match sits beside the possibility of an additional discretionary contribution, although the filing says none was made for 2025 or 2024. The federal total must accommodate both if both exist. The match formula describes only one stream.

Which plan document answers the limit question?

The summary plan description is the practical starting point because it states eligibility, the matching formula, vesting and other operating terms in plain language. The formal plan document controls the plan. Federal dollar limits set outer boundaries, but they do not replace the formula, compensation definition or computation period written there.

The Department of Labor says participants in an ERISA-covered plan are entitled to receive the summary plan description automatically and free of charge. Material changes must be communicated through a revised description or a summary of material modifications.

Five entries answer most match-limit questions:

• The rate and deferral band. A 50 percent match on the first 6 percent produces a 3 percent employer maximum.
• Eligible compensation. The plan may define the pay base more narrowly than gross wages, and the federal compensation ceiling still applies.
• The computation period. Payroll-period matching and annual matching can produce different timing results.
• The true-up provision. This states whether an annual reconciliation repairs a shortfall from uneven deferrals.
• The contribution types matched. Pre-tax deferrals, Roth deferrals, catch-up contributions and employee after-tax contributions do not have to receive identical treatment under every plan.

Vesting answers a different question. It determines how much of an employer contribution the participant owns after a given period of service. A contribution can be credited to an account and later forfeited if the participant leaves before it vests. That does not change the amount initially calculated under the match formula.

Can nondiscrimination rules lower a match for a highly compensated employee?

They can affect contributions under a traditional plan. Matching and employee after-tax contributions generally face the section 401(m) actual contribution percentage test unless a safe-harbor design or another rule applies. Plans may restrict contributions, return excess amounts or use other permitted corrections to remain compliant.

The IRS guide to qualified-plan requirements says matching and employee contributions must satisfy section 401(m), with highly compensated employees tested against non-highly compensated employees. Safe-harbor plans can avoid the annual test by meeting specified contribution and notice conditions.

Plan terms can therefore establish a lower operational ceiling than the three headline dollar limits. The Paychex filing says its plan committee may set a contribution percentage for highly compensated employees below the plan's general 50 percent employee-contribution limit. That provision does not change the 4 percent match formula. It can change the employee contribution available to earn a match or fill the account.

This is another reason the largest federal number is a poor answer to a plan-level question. The relevant sequence is the plan formula, eligible compensation, contribution timing, testing rules and then the section 415(c) total.

FAQ

Is $47,500 the maximum employer 401(k) match in 2026?

No. $47,500 is the arithmetic difference between the $72,000 annual-additions limit and the $24,500 employee elective-deferral limit. Other employer contributions and employee after-tax contributions can use that space. The plan's match formula and compensation definition determine how much of it can be a match.

Is there a federal maximum employer-match percentage?

The Code does not set one general percentage for every traditional 401(k) match. Plan design, nondiscrimination rules, safe-harbor requirements, countable compensation and the total-additions limit constrain the result. The percentage printed in the plan remains the first number to apply.

Does an employer match reduce the amount an employee can defer?

No. An employer match does not reduce the $24,500 regular elective-deferral allowance for 2026. Both amounts count toward the separate $72,000 annual-additions ceiling, with catch-up contributions excluded from that ceiling.

Can two jobs create two $24,500 employee limits?

No. The section 402(g) elective-deferral limit generally follows the employee across covered plans. Section 415(c) can apply separately to plans of unrelated employers, while plans of related employers are combined under its aggregation rules.

Is the employer match always immediately owned?

No. Employee deferrals are fully vested, but employer matching contributions can follow a vesting schedule unless a rule applying to the plan requires faster vesting. The plan's summary description states the schedule. Vesting changes ownership after contribution, not the original match calculation.