401K Contribution limits 2008, 2009, 2010, 2011 and 2012
Generally there are several contribution limits that apply to 401K plans. The first is the limits placed on the employee, the second is the limits placed on the employer and third is the pre-tax contributions versus total contributions
At this time 401K rules permit plan participants that will be age 50 before the end of the calendar year to make additional contribution of the catch up type limits on a pre-tax basis as indicated in the table below.
The IRS maximum allowed 401K contribution will stay the same in 2010 as it was in 2009 at $16,500. Catch up contribution for individuals older than fifty years old will also stay the same for additional $5,500 over the standard.
2008 2009 2010 2011 2012
Pretax or tax deferred 15,500 16,500 16,500 *
Catch up contribution 5,000 5,500 5,500 *
* to be calculated for inflation increments of $500
As represented above the contribution limits of 2011 applicable for 401K programs will be calculated for inflation, which is a form of cost of living index. Those limits will move up in $500 increments.
No increase in maximum contribution levels for 2010 may be a little hard to swallow. It should b e noted that the contribution level has grown every year except 6 since it began in 1987. The maximum 401 K contribution level has never declined.
In 2009 there were some rumors that the maximum 401 K contribution level would possibly decrease due to the Consumer Price Index (CPI) decreasing year after year. That would have been a hard one to swallow, but it did not decrease. We can only wait to see if 2011 will bring another increase. The maximum contribution has never remained the same for three yeas in a row so let’s hope it increases in 2011.
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