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Greetings, Shnook91, and welcome. You asked:

I am in the position of not being able to maximize my 401k contribution in 2004. I took a large pay cut with a promotion(?) and am only allowed to contribute 15% of my salary to my 401k based on my prior years compensation. This means I won't be able to contribute the full $13,000 allowed in 2004. Is there some allowance in the government rules so I can maximize my contribution for this type of situation or am I out of luck.

The maximum amount you can contribute to all 401k plans in which you participate in 2004 is the lower of: (1) the maximum percentage of your salary that's allowed under each of your employer's plans, or (2) $13,000. If your employer's plan limits your contributions to 15% of pay, then you may not exceed that percentage in that plan. In your case, it appears your employer's plan has such a limit. Unfortunately, there is no way around that limit in your situation. In other words, you're out of luck in using the plan.

Depending on your overall income and your filing status, it's possible you may qualify for a deductible contribution to a traditional IRA. To determine if you are, see Table 1-2 on page 14 of IRS Publication 590 (Individual Retirement Arrangements) available at,,id=97819,00.html

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