• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Faithful with a Few

  • Start Here
  • Blog
  • About
  • Contact
  • Start Here
  • Blog
  • About
  • Contact
You are here: Home / Personal Finance / Retirement / 401k Contribution Limits
401KContributionLimits

401k Contribution Limits

By //  by Khaleef Crumbley

Below you will find the 401k Contribution Limits for employees, employers, and also for participants who will be at least 50 years old by the end of the calendar year. You should also consult the IRA contribution limits before completing your retirement plan.

201620152014
401 (k) Contribution Limit$18,000.00 $18,000.00 $17,500.00
401 (k) Catch-Up Contribution Limit$6,000.00 $6,000.00 $5,500.00
401 (k) Contribution Limit for Those Over 50$24,000.00 $24,000.00 $23,000.00
401 (k) Employer Contribution Limit6.0%6.0%6.0%

As you can see, there was no cost of living adjustment from 2015, meaning that the 401k contribution limit for 2016 has stayed the same since last year.

As in previous years, plan participants who will be 50 years of age by the end of the year will be able to make a “catch-up” contribution. The catch-up contribution is an additional amount that those close to retirement are allowed to make. As you can see, the catch-up contribution limit will continue to be $6,000 for calendar year 2016.

Also note that the employer 401k contribution limit remains at 6% of the employee’s pre-tax salary. What this means is that an employee that has a gross salary of $100,000 will be able to contribute up to $18,000 during the year. If they will be at least 50 years old by the end of the year, they will be eligible to make a catch-up contribution up to $6,000; bringing their total annual contribution to $24,000.

401KContributionLimits

If they contribute enough to gain their full 401k employer match, then their employer will kick in an additional $6,000 toward the employee’s retirement. This means that the employee in our example will put away $30,000 this year for retirement!

I’ve talked before about contributing enough to qualify for your full 401k employer match, so be sure to read that article to see why it is so vital to your financial health. Basically, I show how you can earn a return of 167% on your 401k before you begin investing!

With this type of return, and the generous amounts that we are allowed to set aside, contributing to a 401k should be at the top of your list of New Year Resolutions!

photo by MJTR

Tweet6
Pin
Share2
8 Shares
Tweet6
Pin
Share2
8 Shares

Filed Under: Retirement, Taxes Tagged With: 401, 401k contribution limit, 401k contribution limits, catch up contributions, contribution, contribution limit, employer 401k, employment, finance, individual retirement accounts, internal revenue code, labor, new 401k, pension, Personal Finance, roth 401, self employment, vesting

Previous Post: « Heaven!
Next Post: IRA Contribution Limits for Both Roth and Traditional IRA Contribution Limits»

Reader Interactions

Comments

  1. Ann Karen@small business internet marketing

    January 12, 2011 at 2:23 pm

    Have you heard about this EIUL? Which do you think is more beneficial? EIUL or 401k? By the way, huge thanks for sharing your thoughts. ๐Ÿ™‚

  2. krantcents

    January 4, 2011 at 11:53 am

    This is a good reminder to take advantage of the employer match! More people should participate in their 401K.

  3. MoneyCone

    January 4, 2011 at 11:22 am

    I never understood why people don’t contribute to their 401K even when there is an employer match. Why throw away tax-free, retirement money?

    I don’t max out my 401K contribution, just enough to max out my employer contribution.

  4. Everyday Tips

    January 4, 2011 at 8:36 am

    I wish they would increase the upper limit. I would think the government would want us to be able to ‘live on our’ own in our retirement years instead of needing to rely on government programs. I recognize that they want their tax revenue and such, but given all the money that the government is willing to throw at the strategic mortgage defaulters, you would think they might want to instead encourage Americans to save.

  5. LifeAndMyFinances

    January 4, 2011 at 6:21 am

    My wife and I both contribute to our 401(k), but we do not contribute the maximum since we are still digging our way out of debt. In a year, we probably contribute $2,000 between the two of us.

    Also, once we are out of debt, I don’t forsee us maxing out our 401(k) then either. I plan on retiring early, so I would much rather contribute to my own businesses or investment ideas rather than have an age retirement to receive my money. That portion never sit well with me. Why should I pay a penalty on my own money if I want it early!?

  6. retirebyforty

    January 4, 2011 at 1:32 am

    We’ve been maxing out our 401k for quite a few years now and it’s been a great investment vehicle for us. The 2011 contribution limit being the same is OK with me because we’ll have a few more expenses this year because of the upcoming baby. ๐Ÿ™‚

Primary Sidebar

Search

Categories

Subscribe

Subscribe to get updates from our blog!

* indicates required

Connect With Us

  • Facebook
  • Instagram
  • Pinterest
  • Twitter

Copyright © 2021 ยท Mai Lifestyle Pro On Genesis Framework ยท WordPress ยท Log in