401k Maximum Contribution Limits for 2010The 401K maximum contribution limits change year after year, based upon the cost of living and expectations of the future. The maximum 401k contribution per year for the year 2011 is $16,500. There is also a catch up benefit for those who are getting closer to retirement. If you are 50 years or older you may contribute an extra $5,500 making your maximum $22,000. You do not have to meet the maximum, but if you have the money to meet the maximum it is advised by most financial professionals to do so. In order to meet the maximum you must deposit $1,375 every month. However there are certain circumstances which may also affect how much you can deposit. For example if your employer only allows you to deposit up to 20% of your income and you make $40,000 a year then your 401k yearly maximum contribution would be $8,000 not $16,500. Learning about what your employer allows you to do and what they don’t allow you to do is always beneficial since every plan can be different. Your company’s human resources department should either have some information on this or they should be able to point you in the right direction. Either way they would probably be a great place to go to learn more about this plan and about planning for your future. If you have a self employed 401k plan then there are other rules that you will have to follow which could potentially increase the amount that you can invest into your plan in a given year. To read more about that here is a page on the self employed 401k Plan What Happens if You Go Over The Limit? Of course you might want to know what will happen to your plan if you happen to go over the limit. If you do go over this limit then the extra money you have deposited will be withdrawn from your account by April 15 of the next year and you may need to pay extra taxes and penalties on the extra cash that you end up having to withdraw. Return from 401k Maximum Contribution Limits for 2009 to 401k information |
