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Author: Helter Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: 401k Contribution Limit Date: 7/9/1998 8:48 AM
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I was wondering if anyone knows where a schedule of planned increses in the maximum 401k contribution is listed. Does such a thing exist or is it determined by the government each year based on actual inflation experience for that year?

Has it historically gone up every year? If so, about what percent? I'd like to include this increasing limit in my calculations.

Thanks.
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Author: jeffdaley Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4306 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 9:42 AM
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As you probably already know the 1998 limit for the 401K was 9.5K and for 1999 it is 10K. There was a schedule of increases printed but I can not remember where it was printed. I know the first thing to go ...

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Author: Helter Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4307 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 9:55 AM
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I think its:
tax year 1997: 9,500
tax year 1998: 10,000
tax year 1999: what I'd love to know

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Author: Nizac One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4308 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 10:31 AM
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tax year 1998: 10,000

Do you know which IRS publication this is defined in?

I started the year working for employer A and contributed $2K to a 401(k). I'm now working at employer B. Am I responsible for ensuring that my contributions to this second 401(k) do not exceed $8K?

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4309 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 10:46 AM
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Yes, you are responsible for making sure that you don't go over the limit. When I started my new job last year [and also the one before that], the personnel rep just asked for the number that I had already contributed to my previous 401k so that she could put some sort of limit in my account so that I wouldn't go over the limit. I just waited til I got my last paystub from the previous job and gave her the number.

Talk to your personnel rep and see how your company handles it particularly if you are worried that you will go over the limit.

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Author: JoeMiller Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4312 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 11:27 AM
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I started the year working for employer A and contributed $2K to a 401(k). I'm now working at employer B. Am I responsible for ensuring that my contributions to this second 401(k) do not exceed $8K?

I believe you are. Things may have changed but that was the rule when I did tax prep work for Block and later for VITA.

I have no idea which publication to check. I'd start with Pub 17, it is the one publication that has something of value on every topic for the individual. Your question may be too specialized for it but it would help point you toward what other publication to download.

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Author: FoolishProf One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4313 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 11:29 AM
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<I was wondering if anyone knows where a schedule of planned increses in the maximum 401k
contribution is listed. Does such a thing exist or is it determined by the government each year based
on actual inflation experience for that year?>

Helter,
I am not in a 401K but am into 403B. This limit was raised to $10k also. Another limit that was raised is the limit on salary reduction payments if you are on a "catch up" plan. Are you aware of this? If you haven't contributed maximum to the 403B in prior years, you may contribute $13k (new limit) annually until you have "caught up" on $15k of slack in your prior years' contributions. This annual amount was changed from $10.5k to $13k in the last round. I do not know if these same provisions and limits apply to the 401K program as well.

Where's Pixy when we need him????? :})

bob

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Author: Helter Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4314 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 11:45 AM
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<<Are you aware of this? If you haven't contributed maximum to the 403B in prior years, you may contribute $13k (new limit) annually until you have "caught up" on $15k of slack in your prior years' contributions.>>

I most certainly was NOT aware of this. Holy Cow! Can anyone provide any more details on this? Where should I go read?

Can you only 'catch up' if you are with the same employer? What if you've 'maxxed out' at 15%, but not hit the 10k limit(due to a low salary), in future years(when you're making bocu bucks), can you 'catch up' the early years where 15% of your salary was 5k?

Wowee, party time! Get that guy some more coffee!

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4318 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 1:33 PM
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Helter,

<<I was wondering if anyone knows where a schedule of planned increses in the maximum 401k contribution is listed. Does such a thing exist or is it determined by the government each year based on actual inflation experience for that year?

Has it historically gone up every year? If so, about what percent? I'd like to include this increasing limit in my calculations.>>

There are no "planned" increases. Instead, the maximum contribution increases in $500 increments based on the aggregate effects of the CPI. If the year's CPI when applied to the current limit does not exceed $500, then there is no change. The CPI increase is simply carried over and added to the next year's CPI increase. When that combination exceeds $500, the contribution limit is adjusted upwards by $500 for the succeeding year, and the process starts over again. The cumulative effects of inflation must cause the limit to increase by at least $500 before it is adjusted, and even then it only moves to the next higher $500.

Regards…Pixy


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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4319 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 1:35 PM
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Greetings, Nizac, and welcome.

<<I started the year working for employer A and contributed $2K to a 401(k). I'm now working at employer B. Am I responsible for ensuring that my contributions to this second 401(k) do not exceed $8K?>>

Yes, you are responsible for ensuring your combined contributions to both 401k plans do not exceed $10K in the aggregate. As others have pointed out, sometimes a new employer will help you do that, but most don't. Therefore, you have to stay alert and ensure your current contributions cease at $8K. Things can get messy if you permit too much to be contributed.

Regards….Pixy



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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4320 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 1:38 PM
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FoolishProf,

<<If you haven't contributed maximum to the 403B in prior years, you may contribute $13k (new limit) annually until you have "caught up" on $15k of slack in your prior years' contributions. This annual amount was changed from $10.5k to $13k in the last round. I do not know if these same provisions and limits apply to the 401K program as well. >>

The "catch up" contributions pertain soley to 403b plans. They do NOT apply to 401k's. Can't mix apples and oranges, ya know. :-)

Regards....Pixy

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4321 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 1:42 PM
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Helter,

<<I most certainly was NOT aware of this. Holy Cow! Can anyone provide any more details on this? Where should I go read?>>

Can't remember the number, but the IRS has a publication that addresses this. Just go to http://www.irs.gov and conduct a search on 'catch up' contributions.

Regards....Pixy

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Author: Nizac One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4327 of 75383
Subject: Re: 401k Contribution Limit Date: 7/9/1998 3:43 PM
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Yes, you are responsible for ensuring your combined contributions to both 401k plans do not exceed $10K in the aggregate.

I figured it was too much to hope that I would win out this way by changing jobs ;) I guess I'll just be satisfied with the fact I can roll the 401(k) from my previous employer into a self-directed IRA.

Therefore, you have to stay alert and ensure your current contributions cease at $8K.

And as an aside it is presumably important to set the deferral percentage such that I don't hit the limit before my last pay check in the year. Otherwise I would lose some "free money" from the employer match I would miss out on.

p.s. thanks also to 2gifts and JoeMiller. From pub.17 I found a reference to pub.575 which covers this subject in a chapter titled "Limits on Exclusion for Elective Deferrals". Same chapter also mentions the catch-up limits for section 457 plans that I think others referred to, although I didn't read much since I don't have such a plan.

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