The Ultimate 401K Maximum Contribution Guide - 2009 Figures
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401K maximum contribution guidelines dictate how much money you are allowed to invest in 401K accounts in a given year. The exact amount changes every year, depending on the standard cost of living. Every October, the IRS releases the new standard of living rate along with the contribution guidelines for the following year.
Once you figure out your maximum contribution limit, remember that this is for all of your open 401K and Roth 401K accounts combined. This means if your maximum turns out to be $5, 000, your combined contributions in all accounts cannot go over this amount.
To determine exactly what your maximum contribution can be for the year 2009, you have to figure out two different numbers. The first is the maximum figure released by the IRS for all contributors and the second is the maximum limit imposed by the plan your employer has set up for you.
Take the lower figure of these two and you have the maximum amount you can contribute for the year.
The IRS maximum for all contributors for 2009 is $16, 500. Last year it was only at $15, 000, which reflects the changes our national standard of living has gone through over the last year.
The maximum contribution guidelines from your employer will be in the form of a percentage of your salary. For instance, if you earn $65,000 a year and are allowed to contribute up to 15% of that salary according to the plan your employer has set up for you, then you would have a maximum contribution of $9,750.
Obviously, $4, 500 is the lower figure between the employer limit and the federal limit, so this person would only be allowed to contribute this amount in all of their accounts combined for 2009.
People who have to pay attention to the IRS number each year will be those in the higher income brackets. If you are not earning over $100, 000 a year, then you will be bound by the guidelines set up by your employer.
Yet, there is an extra catch-up contribution allowed for contributors aged 50 or over. For 2009 this figure is an extra $5,500. Again, this is to be spread amongst all of your 401K accounts if you have more than one. Not every employer allows the catch-up contributions, so you must ask if you want to take advantage of the extra contribution.
These 401K maximum contribution guidelines do not concern any money that your employer may be adding to your account. Most employers will match the amount you contribute at least partly, and that amount is not included toward your maximum contribution amounts.
Once you figure out your maximum contribution limit, remember that this is for all of your open 401K and Roth 401K accounts combined. This means if your maximum turns out to be $5, 000, your combined contributions in all accounts cannot go over this amount.
To determine exactly what your maximum contribution can be for the year 2009, you have to figure out two different numbers. The first is the maximum figure released by the IRS for all contributors and the second is the maximum limit imposed by the plan your employer has set up for you.
Take the lower figure of these two and you have the maximum amount you can contribute for the year.
The IRS maximum for all contributors for 2009 is $16, 500. Last year it was only at $15, 000, which reflects the changes our national standard of living has gone through over the last year.
The maximum contribution guidelines from your employer will be in the form of a percentage of your salary. For instance, if you earn $65,000 a year and are allowed to contribute up to 15% of that salary according to the plan your employer has set up for you, then you would have a maximum contribution of $9,750.
Obviously, $4, 500 is the lower figure between the employer limit and the federal limit, so this person would only be allowed to contribute this amount in all of their accounts combined for 2009.
People who have to pay attention to the IRS number each year will be those in the higher income brackets. If you are not earning over $100, 000 a year, then you will be bound by the guidelines set up by your employer.
Yet, there is an extra catch-up contribution allowed for contributors aged 50 or over. For 2009 this figure is an extra $5,500. Again, this is to be spread amongst all of your 401K accounts if you have more than one. Not every employer allows the catch-up contributions, so you must ask if you want to take advantage of the extra contribution.
These 401K maximum contribution guidelines do not concern any money that your employer may be adding to your account. Most employers will match the amount you contribute at least partly, and that amount is not included toward your maximum contribution amounts.
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