Wednesday, 1 August 2012

How to choose 401k contribution Limit for your 401k plan?

The maximum amount a 401k participant can contribute to his 401k account is set every year by IRS after taking inflation into account. In year 2011, people can contribute up to $16,500 as an elective deferral to their 401k plan account. But, if the participant is 50 year old or more than it, then can contribute an additional catch up contribution of $5,500. But, for the year 2012, IRS has announced the maximum 401k maximum contribution limit as elective deferral as $17,000. And the additional catch up limit has now become $6,000 for the year 2012.

401k GPS, the leading investment advisory firm of USA, can provide you the additional information about highly compensated employee limits, If you fall into that category.
The catch-up 401k limit for the year 2012, is now becomes $5,500, and the maximum 401k contribution limit announced by IRS for the year 2012 is $17,000, and now again in 213, it is $17,500.
How to choose 401k contribution Limits for your 401k  plan?
These are some important points, which can help you to decide the right contribution percentage to your 401k retirement plan.
1)      What is your company match offer?
2)      What is your limit and your company’s limit?
3)      What is your age?
4)      Your personal situations?
5)      Understand the power of Compound Interest very well.

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