401(k) deductions on your paycheck
Traditional 401(k) reduces your federal taxable wages and most state taxable wages — but not Social Security or Medicare. Roth 401(k) does not reduce taxable wages but qualified withdrawals are tax-free.
2025 contribution limits
- Employee elective deferral: $23,500
- Catch-up contribution (age 50+): $7,500
- Enhanced catch-up (ages 60–63 under SECURE 2.0): $11,250
Pre-tax (traditional) 401(k)
Reduces federal income taxable wages. Reduces most state income taxable wages. Does not reduce Social Security or Medicare wages — FICA still applies to the full amount.
Roth 401(k)
Taken from your paycheck after taxes. Does not lower current taxable income. Qualified withdrawals (5-year rule + age 59½) are tax-free, including investment growth.
Employer match
Employer matches do not appear as an income or deduction line — they show up in your retirement account separately. Match formulas vary widely (e.g., 100% of first 3%, 50% of next 2%).
Official sources
- IRS — 401(k) limit increases — IRS · 2025 · last verified 2025-04-01
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