How Much Can I Put In My 401K?

The cap on employee contributions to a 401K plan has been raised for 2009. How much can I put in my 401K for 2009 and 2010?

The 401K retirement plan is one of the most popular benefits in today’s business environment. The plan is designed for the employee to place tax deferred income into an account with the employer matching the funds in full or by a percentage. Often the employer will match the employee contribution by 50% up to 100%.

How Much Can I Put In My 401K?

The employee may contribute up to 25% (twenty-five percent) of his earned income up to set limits. The contribution an employee can make to his 401K retirement plan was raised in 2009 from a previous contribution of $15,500 to $16,500. The contribution cap applies to the tax years 2009 and 2010. The employee can determine how much of his income he contributes up to the maximim of $16,500, providing he has not reached the age of fifty.

How Much Can a 50 Year Old Employee Contribute to His 401K?

If the employee is age fifty (50) or older he may contribute up to $22,000 of his earned income to his 401K retirement plan not to exceed 25% of his gross income. The higher contribution cap for those fifty and older was instituted to allow employees who may not have been a part of a 401K plan or may not have worked for an employer which offered the retirement benefits an opportunity to catch up.

The total contribution made by employee and employer in one year is capped at $49,000 for the tax years 2009 and 2010 up $3,000 from 2008. An employee should consider that only the first $245,000 of annual income is considered for compensation. The income cap for considered compensation was raised from the $230,000 limit in 2008.

Related posts

1. What Are Contribution Limits For 401K & Roth Ira’S For 2010?
2. What Are The Limits On 401K?
3. How to Make a Contribution To a 401K?
4. What Is The Maximum 401K Contribution?
5. What is the 401K Contribution Limit?

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