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401k Contribution Limits for Seniors


The U.S. government places a cap on how much seniors can contribute to a 401k annually. This limit may vary from one person to the next based on a couple factors (such as salary, age and employer 401k plan). Keep reading to learn how much you are legally allowed to contribute to your 401k in 2011.

2011 Maximum 401k Contributions

The IRS has announced a max contribution rate of $16,500 for 2011. This figure is the same as previous years and also applies to 403B and 457B retirement plans. However, it should be noted that individuals over 50 years of age have the option of contributing an additional catch-up contribution. The maximum for this added contribution is $5,500. Therefore, individuals aged 50 and over may currently contribute up to $22,000 into a 401k account. Additional catch-up concessions may be available each new year if cost-of-living increases have occurred.

Note that 401k contributions made by your employer do not contribute to your maximum allowance. This means that you may be able to receive up to an additional six percent of your pre-tax compensation above the national maximum limitation (based on the maximum allowed contributions for employers).

Caveats to the National 401k Maximum Limit

It should be noted that not all U.S. residents are eligible to contribute the maximum national allowance. IRS laws stipulate that an individual's maximum allowance is either the national maximum or the maximum percentage contribution limit as designated by the employer's plan. In all cases, the lower of the two values applies. As such, if your employer offers a maximum contribution of $10,000 annually, then the national maximum does not apply to you.

Similarly, catch-up contributions may only be made if your employer's plan allows them. It is recommended you read and review your current 401k plan to determine if additional restrictions apply.

Contributing to Multiple 401k Plans

Annual 401k maximums apply to all 401k plans an individual holds. As such, combined contributions of all accounts may not exceed your personal maximum allowed contribution level. Maximum allowances apply to both traditional 401k plans and Roth 401k plans.

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