How much can a participant defer?
The IRS limits the amount a participant can defer in a given calendar year. This is the 402(g) limit which is an indexed amount. For 2010, the maximum allowable salary deferral contribution is $16,500. Participants at least 50 years of age can defer an additional $5,500. The amount a participant can defer may also be further limited by the plan sponsor through a provision in the adoption agreement by imposing a maximum deferral percentage or adopting a SIMPLE 401(k) Plan. The deferrals are also subject to the 415 limit described under compliance testing.
