Gold 401K

Gold 401k Guidelines
Gold 401k Guidelines

401k maximum contributions are regulated by a number of different rules. The IRS institutes rules that dictate specifically how much money you can contribute each year into your 401k. The first major rule is the requirement that the annual maximum contributions be the lesser of:

1. maximum contribution percentage limit of the individual employer’s plan or

2. $16,500 for year 2009.

The amount in #2 varies from year to year based on a calculation made by the IRS. For example, in 2008, this amount was $15,500. This amount changes because of adjustments to cost of living increases by the IRS. In addition, these amounts are specifically for traditional or safe harbor 401ks. There is a different amount set for SIMPLE 401k plans. 

Beyond this main rule, you will find a few other smaller rules that can influence this maximum contribution number. For example, people 50 or older, can also make an additional contribution based on the “catch up” contribution rule. This is currently $5,500 for 2009 for traditional 401ks and $2,500 for SIMPLE 401ks. It also is adjusted each year for cost of living increases. This makes for a nice opportunity for older people to be able to catch up on setting aside more money towards retirement.

Another rule is the one 401k rule for IRS purposes. This means although you may have more than one 401k plan, the IRS views you as only having one for 401k maximum contributions. This means the grand total of your contributions to all your 401k plans must be under the $16,500 limit for year 2009. 

Knowing these rules is instrumental in helping you form a sound investment strategy. Since 401ks have grown to be the main portion of most people’s retirement plan, it is a very good idea to learn all the rules that pertain to them, especially the annual limits for 401k maximum contributions.

For more information on 401k Maximum Contributions, try visiting http://www.accountretirement.net – it is an information website offering tips and investment advice concerning all types of retirement plans and options.