Greetings, Heidelaf, and welcome. You asked:I have a question.... Is it normal for a 401k plan to cap percentage amount allowed? I thought the cap was 15% (IRS limitation), but my company caps at 10%. For a profit sharing plan, the legal percentage limit is 15% of compensation for you and your employer combined. For a money purchase or money purchase/profit sharing combination plan, the percentage limit goes up to 25%. You plan is quite obviously the former.At the end of each plan year the government requires extensive and complicated compliance and discrimination testing for each plan. Based on the requirements for these tests, many plans will set the maximum participant contribution at a lesser rate than that allowed by law. By doing so, the plan ensures it will have little chance of failing the various tests at the end of each plan year. A failure would mean either disqualification of the plan or a refund of part of that year's contributions to participants, neither of which is a desirable outcome for the plans or the participants. Therefore, such a cap is probably more common than no cap at all.Regards..Pixy
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