How Much Can I Contribute To My 401K Plan At Work?
Tips to ensure happiness and financial well-being during your golden years when thinking “how much can I contribute to my 401K plan at work?
To ensure for a happy, financially sound retirement, you need to have a strategy when trying to decide how much you can contribute to your 401K plan at work.
How Much Can I Contribute To My 401K Plan At Work?
The maximum contribution allowed for your 401K plan is $16,500 a year. These contributions are deducted from your paycheck pre-tax, which means they lower your taxable income. You do not pay taxes on your contributions or the 401K’s earnings until you take the money out. While $16,500 may seem like a large sum of money, you have to remember that the more your contribute to your 401K, the more you have working for you in a tax-deferred environment. Your money will grow faster than if you just had it in the bank, because you are not paying taxes on the earnings yearly, therefore, you have more money that can grow. If you are 50 years of age or older you can contribute and additional $5,500 to your 401K plan as a catchup contribution. If you earn less than $16,500, you are only allowed to contribute up to the amount of your earnings.
How Else Can I Contribute To My 401K Plan At Work?
If you are employed by a company that makes matching contributions to your 401K account, consider yourself lucky. The amount the company will match can depend on how much you contribute, how long you have been with the company, and other factors that you can discuss with your plan administrator. It is in your best interest to take advantage of this matching contribution, because it is in essence, free money.
With careful budgeting you should be able to take advantage of all the perks of your 401K plan at work and make the maximum contributions possible so you will see the maximum results.
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