Pixy,

jrr7 wrote:
As I hear it, the 401(k) limits are:

The employee can contribute the lesser of $10,500 or 25% of his salary.
The total money added to the 401(k), including both employee and employer contributions, must be less than $35,000 and must be less than 25% of her salary.

I don't know where taxable and after-tax comes into play.

http://boards.fool.com/Message.asp?mid=14841255

You (Pixy) wrote:
Another way to look at it is to say your contribution as the employee must be the lesser of $10,500 or 15% minus the percentage represented by the employer's contribution. If the employer kicks in 3% of pay, then your percentage limit becomes 12% in a profit sharing plan.

http://boards.fool.com/Message.asp?mid=14613952

Can you clarify? Is it 15% or 25%?

Thanks.
the hendrys

There's a very timely Fool article on this very subject:

http://www.fool.com/retirement/retireeport/2001/retireeport010423.htm?ref=PRMPPF1

My employer limits my contributions to 15%, but I believe that it's a plan limit to ensure that total employee contributions don't exceed 15% of total salary. I believe that, if my plan allowed it, I could legally contribute up to 25% or $10,500, whichever is less, but if too many employees made such large contributions, the plan would be out of compliance. By capping individual contributions at 15%, the administrator can ensure that the plan as a whole won't exceed 15%.

The Hendrys ask:

Can you clarify? Is it 15% or 25%?

It is both depending on what you're talking about. The thread you were referring to talked about a defined contribution plan that was a profit sharing plan only. By law, a profit sharing plan is limited to 15% of compensation. A defined contribution plan with a money purchase option goes up to 25%. While a 401k plan is often thought of as a profit sharing plan, the overall plan may include other features that allow for the 25% limit.

Regards..Pixy

Thanks Pixy.

I am now officially Un-Confused.

My plan is called a 401(k) Profit Sharing Plan, but after viewing the details closer, I found out that I am allowed to contribute $10,500 as long as my contributions plus my match do not exceed $30,000 or 25% of my salary.

Thanks for all your wisdom!
the hendrys