YOU ASK:

What are the 401k maximum contribution limits for 2006, 2007, 2008, and 2009?

WE ANSWER:

Being a qualified company retirement plan, 401(k) includes the so-called cash or deferred arrangement (CODA) which allows employers to defer part of their wages rather than receive them in cash.

Under a 401k plan, individuals can set aside portions of their salaries and invest them in the retirement plan on a tax-deferred basis.

401k Elective Deferral Contribution Limits

An employee can decide to defer 100% of compensation up to a dollar limit set for each year. Table 1 shows that the maximum contribution limits for tax years 2006, 2007, 2008 and 2009 are.

Tax Year Elective Deferral Contribution Limit Catch-up Contribution Limit
2006 $15,000 $5,000
2007 $15,500 $5,000
2008 $15,500 $5,000
2009 $16,500 $5,500

Table. 401k deferral-contribution limits (2006-2009).

Any deferral contributions in excess of the specified limits are called excess deferrals, and they have to be removed from a 401k plan to avoid penalties.

Eligible employees who are age 50 or older are allowed to make extra contributions to their 401k plan, called "catch-up contributions." Thus, individuals aged 50 or older, can invest a maximum of $22,000 in their 401k plans for the year 2009.

Was this question and its answer useful?
Not a bit
  • Currently 0/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Very useful
Have a question about insurance? Ask the experts
Share: