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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: of 19220  
Subject: Re: Comment on What Data Do You Believe? article Date: 10/17/2000 2:10 PM
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Greetngs, Frazierb, and welcome. You wrote:

<<I think the article as a whole provides a valid point, but I don't think the figures the author researched completely dispute the original "facts". On the 401K point, I think he is confusing the definitions of maximum contribution. There are two: the statute limit ($10,500) and individual plan limits (typically 15% of base earnings). Many people, myself included, are contributing the max they can to their company's plan. However, we don't make enough to contribute the statutory max of $10,500. The max I can contribute to my plan at my current salary is about $9,000. Therefore, I am contributing the max under the definition I think the ICI is using, but I am not contributing the max based on the legal limit. >>

For defined contribution plans in general the maximum limit is the smaller of 25% of pay or $10,500. In a profit sharing arrangement, that becomes 15% or $10,500. It really depends on the plan you have. I would conceed it's possible to have a money purchase plan in which your employer for compliance testing purposes has limited your contribution to 15%. In that case, it's conceivable you could not reach the statutory limit of $10.5K. Still, you have contributed the maximum possible amount you could to that plan.

In any event, I'm pleased you question my data as well. That was the whole purpose of the article -- To get you and others to think and not blindly accept what some columnist writes. You did that, so congratulations. You passed the test.

Regards..Pixy
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