401k contribution limits (2006-2009)

Your figures are accurate for 2006 and 2007. For 2008 and 2009 they ~might~ be accurate. According to the IRS at http://www.irs.gov/retirement/sponsor/article/0,,id=151925,00.html the contribution limits are set by cost of living increases, which haven't yet been established for the future. If cost-of-living increases are on the order of 3%/year, those could very well be the figures for 2008 and 2009. But best to check with an IRS source toward the end of the year to see if the 2008 contribution limit is indeed $16,000.

Thanks for the info

Don't forget that if you are over 50 years old you can contribute an additional $5K.

Comment 1 is right on. The 2008 number could, theoretically, be +$500, +$1000, or nothing (no change). Last year about this time (3Q 2006), researchers crunched the numbers and came up with a projected increase of $500. But that was not official until the actual end of the year. So far as I can tell, the numerous web references to a 401K contribution limit of $16,000 (as of 9/25/07) are based on misunderstanding and/or speculation, NOT analysis of the data that will drive the adjustment.

And the official word today here: IRS Announces Pension Plan Limitations for 2008 http://www.irs.gov/newsroom/article/0,,id=174873,00.html Answer? $15,500 for 401(k) in 2008. Any financial web sites or gurus (barring present company, of course) stating $16,000 have been revealed as NOT KNOWING WHAT THE HECK THEY ARE TALKING ABOUT. But you (we) know better! Insert evil grin. Might wanna update that table, though.

Thanks H B

As well, a useful addition would be to show the 401k catch up contributions that the IRS allows people of age 50 and above to make towards their retirement plans Pre-Tax 401k Catch Up Contribution Limits 401k investors who reach the age of 50 before the beginning of the calender year are permitted to make additional Catch Up contributions to their 401k retirement accounts, the limits are shown below on a pre-tax basis. Source: http://www.401klookup.com Year Pre-Tax 401k Contribution Limit 2004 $3,000 2005 $4,000 2006 $5,000 2007 $5,000 2008 $5,000 2009 $5,500 (Note this is incremented by $500 from 2008 to account for inflation)

my employer stopped my biweekly contribution to 401k plan in aug of 08 as they thought that i had filed papers to stop the contribution which i had not. now i wand they to do 'retroactive contribution plus the company matches.' the human resource said they dont know hwo to go about doing this, but suggested that i restart the 401k plan, and increase the percentage to catch up the missed contribution. i understood their point, but doing so i would loss the 'matching contribution' from aug 08 to now. how is the best way to address this without not losing the matchign contribution? your advice would be greatly appreciated. thanks. jd

@jd That's a tough one. Really there is nothing you can do and it is entirely up to your employer, but even then I'm guessing they may be reluctant to or even have their hands tied to make up for those lose matching contributions. Some companies do what is called a "true up" contribution that in cases where a person stopped contributing during the year or say maxxed out their contributions early in the year would get an extra payment at the end of the year to make sure they got the maximum match. In your situation though you really are at the mercy of your company and the HR dept and will have to work it out with them on the matching contribution. If there is any consolation you still might come out ahead as anything you put in the market in august, sept, oct, and november of last year would have lost quite a bit of value in the market so you might come out ahead by just upping your 401k percentage. Hope that helps MFJ

mfj, thanks for your feedback and comment. now that the year 2008 has ended, is a 'true-up' for the year 2008 doable? if not, i will go with upping the percentage. jd

@jd My guess is your employer won't do much for you and may not be able to as I believe they have to treat everyone equally in the 401k plan. At least in my companies case they never due the true up contribution until February or so - so calendar year is less of an issue for them as it is you, but again they may be restricted by the 401k plan rules they have setup. It never hurts to ask though if it was an error on their part maybe they can do something else to help you. But like I said earlier this error may actually help you and I'd recommend figuring out what you would have contributed during that time and bumping up your 401k contributions now to take advantage of it as you will be able to buy the shares much cheaper now than you could of last fall. Good luck MFJ

thanks mfj for your thoughts. they are much appreciated. i will discuss with hr this week and see what turns up.