401(k) Contributions
To begin or change your contributions to your 401(k) plan you should contact your employer. Most 401(k) plans allow you to increase, decrease, stop and restart contributions as often as you wish, without fees or penalties. You may defer each year a maximum of 100% of your gross compensation* or an annual dollar limit, whichever is less.
The dollar limits are as follows:
| Year | Contribution Limit |
|---|---|
| 2008 | $15,500 |
| 2009 | $16,500 |
After 2009, contribution limits will increase in $500 increments to correspond with inflation rate increases (the limits will not necessarily increase every year).
* Your gross compensation must first be reduced by any mandatory pre-tax (“picked-up”) employee 401 plan contributions.
Catch-Up Provision
The 401(k) plan offers a “Catch-Up” provision that allows you to contribute an additional amount when you reach age 50. This additional amount is shown below:
| Year | Catch-Up Limit |
|---|---|
| 2008 | $5,000 |
| 2009 | $5,500 |
After 2009, contribution limits will increase in $500 increments to correspond with inflation rate increases (the limits will not necessarily increase every year).