There are important limits on how much an employee can contribute to an employer sponsored 401k plan. The 401(k) limit applies to all 401(k) accounts you might have for the current year. Taxpayers that are 50 years or older are entitled to benefit from special rules that will allow them to contribute more to their 401k retirement plans. These taxpayers should also be contributing to IRA retirement plans in order to make sure that they are fully prepared to retire.
401(k) Contribution Limits from 2010 to the Current Year
- For 2015: $18,00 ($23,500 if age 50 or older)
- For 2014: $17,500 ($23,000 if age 50 or older)
- For 2013: $17,500 ($23,000 if age 50 or older)
- For 2012: $17,000 ($22,500 if age 50 or older)
- For 2011: $16,500 ($22,000 if age 50 or older)
- For 2010: $16,500 ($22,000 if age 50 or older)
The best way to make sure you take full advantage of these amounts is to deduct a certain percentage from each paycheck into a 401k plan. Often, many 401k plans have matching employer contributions. Matching contributions from the employer are limited to 25% of your salary (or 20% of your net self-employment income if you are self-employed).