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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 74800  
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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