How Much to Contribute to 401k? Tips, Advice and What to Avoid On 4/26/21 at 5:53 AM EDT Americans can save for their retirement by investing in a 401(k) plan, whose name is taken from the section of the U.S. income tax code that created it. The employer-sponsored retirement program allows employees to contribute a portion of their wages towards different investment options, such as stocks and bonds. The amount of the contribution depends on the individual and some employers will match a portion of an employee's 401(k) contribution. The contribution amount "has to stay within two sets of limits: those set by the federal government and those set by your employer," says the Financial Industry Regulatory Authority (FINRA).