401k plan is considered as the main ticket of most employees to a financially secure life after retirement. Those who normally maximize the allowable annual contributions are the employees who fully depend on 401k for their retirement finances. If you’re among these people, you’re always hoping for an increase in the contribution limits every year. And, perhaps, a couple of times you’ve been disappointed. The 2010 401k max were the same as those of 2009 and have remained untouched this year.
The limits to contributions for employee benefits assisted by the US government vary according to the yearly cost of living every. For 401k total contributions per year, the yearly increment is set at $1,000. However, late 2009, rumors even spread that last year’s maximum limits were going to have a $500 cut.
As the low inflation caused food, fuel and other basic needs become more reasonably-priced during the previous years, the disadvantage was that Social Security beneficiaries and retirement plans had their financial limits retained.
The 2010 401k max on elective deferrals, which are your pre-tax salary deductions, was $16,500 for traditional and safe harbor plans. $11,500 was the limit for SIMPLE 401k plans. This year, these numbers were retained.
If you’re a 401k plan participant, you’d probably know that there is a catch-up contribution allowed from employees who are aged 50 years old and above. Plan participants qualified for this benefit could add up to $5,500 to their standard pre-tax contribution in 2010 for a traditional or a safe harbor plan. SIMPLE 401k plan holders, on the other hand, could increase their elective deferral by $2,500.
You can also give after-tax contributions to your 401k. You shouldn’t exceed, though the total contribution limit for the year if your post-tax and pre-tax contributions are added. The 2010 401k max limit on contributions for the year was $49,000 or 100% of your whole compensation, whichever is less. This remained, too, for 2011.
Employees who’ve been able to maximize their contribution limits in the past years are probably looking forward to an increase in the cap in 2012. Not that they’re praying for a full-blown inflation, but only to be able to contribute more to their retirement savings.