More About IRS 401k Limits
|
Check the Situation That Best Applies to You... And Then Click the Button Below to Get Your Free Debt Analysis I need help with credit card debt I need help with unsecured loans, personal loans, lines of credit I need help with medical bills I need help with collections or repossessions I need help with business debt
(Click the button above to get your free debt analysis) |
401k is among the retirement savings plan that helps you save money, as well as have lower taxes on your salary. Since having pre-tax deductions on your salary through retirement contributions is too good to miss out on, financial consultants urge people to contribute to their 401k plans.
The Internal Revenue System, or IRS, announces the ceiling for elective deferrals and other retirement contributions every year. This year, the IRS 401k limits allow the lesser amount between $49,000 and 100% of your total compensation. The yearly ceiling is indexed for inflation per year in increments of $1,000. Accounted in this total for the year are your personal elective deferrals, which include the standard and catch-up pre-tax contributions, and your post-tax contributions.
The most that you can contribute to your elective deferral for the year is $16,500 if you are participating in a traditional or a safe harbor plan. If you are participating in a SIMPLE 401k plan, your pre-tax deferral can be up to $11,500 this year. But in addition to these standard elective deferrals, you can contribute more to your 401k plan.
One benefit the US government came up with for people who are nearly retiring is the catch-up contribution, which is included in the 401k maximum contributions. It aims to help people save more money before finally retiring. Qualified plan participants are those who have already reached the age of 50, at least. Those who are aged 50 and above are the qualified plan participants. For those who are in a traditional or a safe harbor plan, the catch-up maximum is $5,500, while those in a SIMPLE 401k plan can give up to $2,500 in addition to their standard elective deferral.
Aside from your standard and catch-up deferrals, you can also make additional contributions after taxes and other deductions are made from your gross salary. Your contributions from your post-tax salary are allowed, provided that you do not go beyond the IRS 401k limits for contributions for the year.
To learn more about how you can give the maximum contribution allowed for your 401k plan, talk to your plan administrator. Ask your employer, too, about how you can contribute more to your plan. it is best to visit the IRS official website for more 401k materials and info.
Leave a Reply