The 415(c) Annual Additions Limit, Explained

Section 415(c) of the Internal Revenue Code is the master ceiling for everything that flows into a defined-contribution retirement plan in a single year. It is the number that controls how much your mega backdoor Roth is worth, how much your S-Corp can contribute on your behalf, and where every Solo 401(k) maxes out. In 2025 it is $70,000.

What §415(c) covers

The §415(c) limit, also called the "annual additions" limit, applies to defined-contribution plans — 401(k), 403(b), profit-sharing, money-purchase, SEP, and Solo 401(k). For each plan it caps the total of:

• Employee elective deferrals (pre-tax and Roth)
• Employee after-tax contributions
• All employer contributions (match, profit-sharing, non-elective)
• Forfeitures allocated to your account

For 2025 that total is capped at $70,000, or 100% of your compensation, whichever is less. The number is indexed for inflation; it was $69,000 in 2024 and $66,000 in 2023.

What §415(c) does not include

Three categories sit outside the cap and are easy to miss:

• Age-50 catch-up contributions ($7,500 in 2025) under IRC §414(v) — added on top of the $70,000.
• The SECURE 2.0 super catch-up for ages 60–63 ($11,250 in 2025) — also on top.
• Rollovers from another plan or IRA — never counted toward annual additions.

A 62-year-old whose employer maxes the §415(c) limit can therefore receive $70,000 + $11,250 = $81,250 in a single year, all qualified.

Why it sets the mega backdoor Roth ceiling

The mega backdoor strategy uses after-tax contributions to fill the gap between the §402(g) elective-deferral limit ($23,500 in 2025) and the §415(c) total:

• §415(c) limit: $70,000
• − §402(g) deferral used (typically $23,500)
• − Employer match (varies; assume $5,000)
• = After-tax / mega backdoor headroom: $41,500

If the plan permits after-tax contributions and in-plan Roth conversions, that $41,500 can be moved to Roth treatment, where it grows tax-free for life. Every dollar of the calculation traces back to the §415(c) ceiling.

Per employer, not per participant

The §415(c) limit applies per unrelated employer. A consultant with a Solo 401(k) from her own business and a 401(k) from an unrelated W-2 employer can fill the §415(c) cap in each plan separately, subject only to the shared §402(g) elective-deferral limit. Controlled-group and affiliated-service-group rules under IRC §§414(b), 414(c), and 414(m) collapse what look like two employers into one for this purpose; the test is mechanical and worth running before assuming two caps.

Common mistakes

• Treating §402(g) and §415(c) as the same number. They are not. §402(g) is the $23,500 employee deferral cap; §415(c) is the $70,000 total.
• Forgetting that the employer match counts toward §415(c). A generous match reduces your mega backdoor headroom dollar for dollar.
• Assuming the catch-up is inside the cap. Catch-up contributions sit on top of the §415(c) limit under §414(v).
• Confusing §415(c) with the §401(a)(17) compensation limit. The compensation limit ($350,000 in 2025) controls how much salary the employer can use when calculating its match — a different ceiling that bites highly paid employees in profit-sharing formulas.

Sources

• Internal Revenue Code §415(c), full text via Cornell Legal Information Institute: law.cornell.edu/uscode/text/26/415
• IRS, "COLA Increases for Dollar Limitations on Benefits and Contributions" (annual table): irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions
• IRS Notice 2024-80, 2025 inflation-adjusted retirement plan limits: irs.gov/pub/irs-drop/n-24-80.pdf
• Treasury Regulation §1.415(c)-1, defining annual additions: law.cornell.edu/cfr/text/26/1.415(c)-1
• IRS Publication 560, Retirement Plans for Small Business (current edition): irs.gov/forms-pubs/about-publication-560
• Internal Revenue Code §414(v), catch-up contributions: law.cornell.edu/uscode/text/26/414

RetirementCheck101 calculates your remaining §415(c) headroom automatically for each plan you participate in. Explore the free educational tool to see your exact mega backdoor capacity.