Each Wednesday 401kBasics posts a new article in a weekly series called “Keep the Course”. This series is designed to give the average consumer information on how to keep their 401k plan on track! Your feedback or suggestions on future articles is welcome.
Each year, the IRS determines how much money each individual is allowed to save in their 401k. Generally speaking, the limits are increased slightly from year to year, if inflation increased enough to justify it. This is referred to as Cost Of Living Adjustments (COLA). Last week, the IRS announced that the COLA for 2011, relating to 401k plans, will remain the same as the 2010 limits:
- 402(g) Limit: $16,500 – This is how much a participant can defer in traditional and/or roth contributions.
- Catch Up Limit: $5,500 – This is an additional traditional and/or roth contribution that those at least 50 years old can deposit above the 402(g) limit.
- 415 Limit: $49,000 – This is referred to as the annual additions limit, and represents the total combined contributions into a single participant’s account including all employee and employer contributions.
The limits detailed above are the IRS maximums, however individual retirement plans may have stricter restrictions. As always, consult your plan sponsor or Summary Plan Description for your plan’s specifics.
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