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401k Contribution Limits for 2010
16-01-2010
Tagged Under : 401k Contribution, 401k Contribution Limits, Contribution Limits, Limits
When it comes to 401k contribution limits, or the combined total contribution you can make per year to all of your 401(k) plans including traditional 401(k) plan and Roth 401(k) plan, there are two rules that govern the maximum contribution amount. First is the percentage of your pay that your employer allows you to contribute. For example, if you make $40,000 per year and your employer allows up to 20% of your salary to be used for 401(k) contribution, then your maximum is $8,000. Second is the legal limit allowed by the IRS as shown below.
401(k) Maximum Contribution Limits
The contribution limit remained unchanged from 2009 to 2010. Here are the current contribution limits:
2010 $16,500 2009 $16,500
401(k) Catch-Up Contribution Limits
If you are 50 years or older, you may also be eligible to make “catch-up” 401k contributions in addition to your regular 401(k) contributions — assuming your employer allows for this (unfortunately, not all employers are required to do this). 401(k) catch-up contributions are limited each year to an additional
2010 $5,500 2009 $5,500
Rules for Multiple 401(k) Plans
If you have more than 401(k) plan — i.e., Roth 401(k) and standard 401(k), or multiple employers — the above 401k limits apply regardless of the number of plans you participate in. In short, the limits above apply to your total combined contributions — your combined contributions to all plans cannot exceed the above 401k limits.
Contribution Limits and Employer Matching Contributions
Some employers contribution additional amount to your 401(k) — often, these are call matching contributions. Fortunately, the matching contributions made your employer are NOT counted toward your 401k contribution limits. In other words, if you contribute the maximum amount each year, you are still eligible to receive your employer’s matching contributions above and beyond 401k limits.
Other Considerations
In addition to the basic information above, there are rules governing highly compensated employees (HCE) and specific rules impose by your 401(k) plan administrator. To understand the specifics that apply to you, be sure to review your employer’s plan documents and contact the plan administrator for more information.
Tags: salary, 401k contributions, IRS, e roth, 401 k contributions, 401k limits, 401k contribution limits
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