401k Contribution Limits for 2010

By Andy Tenton, on January 15, 2010

When it comes to 401k contribution limits, or the combined total contribution you can make per year to all of your 401(k) plans including traditional 401(k) plan and Roth 401(k) plan, there are two rules that govern the maximum contribution amount. First is the percentage of your pay that your employer allows you to contribute. For example, if you make $40,000 per year and your employer allows up to 20% of your salary to be used for 401(k) contribution, then your maximum is $8,000. Second is the legal limit allowed by the IRS as shown below.

401(k) Maximum Contribution Limits

The contribution limit remained unchanged from 2009 to 2010. Here are the current contribution limits:

401(k) Catch-Up Contribution Limits

If you are 50 years or older, you may also be eligible to make “catch-up” 401(k) contributions in addition to your regular 401(k) contributions — assuming your employer allows for this (unfortunately, not all employers are required to do this). 401(k) catch-up contributions are limited each year to an additional

Rules for Multiple 401(k) Plans

If you have more than 401(k) plan — i.e., Roth 401(k) and standard 401(k), or multiple employers — the above 401k limits apply regardless of the number of plans you participate in. In short, the limits above apply to your total combined contributions — your combined contributions to all plans cannot exceed the above 401k limits.

Contribution Limits and Employer Matching Contributions

Some employers contribution additional amount to your 401(k) — often, these are call matching contributions. Fortunately, the matching contributions made your employer are NOT counted toward your 401(k) contribution limits. In other words, if you contribute the maximum amount each year, you are still eligible to receive your employer’s matching contributions above and beyond 401k limits.

Other Considerations

In addition to the basic information above, there are rules governing highly compensated employees (HCE) and specific rules impose by your 401(k) plan administrator. To understand the specifics that apply to you, be sure to review your employer’s plan documents and contact the plan administrator for more information.

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Andy Tenton is a freelance writer with strong interest in personal finance. He recently started his own blog, Money Destiny.

All posts by Andy Tenton

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