What is the maximum amount I can contribute to my 401(k) plan?
Each fall, the IRS sets the maximum that employees can contribute to their 401(k) plans the next year. After going up by a set amount for many years, starting in 2007 the limit will be indexed to the consumer price index, in $500 increments. For 2007, the maximum employee contribution is $15,500. If you will be 50 or older in 2007, you can make an additional “catch-up” contribution of $5,000, bringing your total to $20,500. The catch-up contribution will also be indexed to inflation in $500 increments. Employers may impose their own contribution limits, such as a percentage of salary, that effectively reduce the maximum contribution below the IRS limit.
