What are the 401k maximum contribution limits for 2006, 2007, 2008, and 2009?
Being a qualified company retirement plan, 401(k) includes the so-called cash or deferred arrangement (CODA) which allows employers to defer part of their wages rather than receive them in cash.
Under a 401k plan, individuals can set aside portions of their salaries and invest them in the retirement plan on a tax-deferred basis.
401k Elective Deferral Contribution Limits
An employee can decide to defer 100% of compensation up to a dollar limit set for each year. Table 1 shows that the maximum contribution limits for tax years 2006, 2007, 2008 and 2009 are.
| Tax Year | Elective Deferral Contribution Limit | Catch-up Contribution Limit |
|---|---|---|
| 2006 | $15,000 | $5,000 |
| 2007 | $15,500 | $5,000 |
| 2008 | $15,500 | $5,000 |
| 2009 | $16,500 | $5,500 |
Table. 401k deferral-contribution limits (2006-2009).
Any deferral contributions in excess of the specified limits are called excess deferrals, and they have to be removed from a 401k plan to avoid penalties.
Eligible employees who are age 50 or older are allowed to make extra contributions to their 401k plan, called "catch-up contributions." Thus, individuals aged 50 or older, can invest a maximum of $22,000 in their 401k plans for the year 2009.
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