No. of Recommendations: 2
It depends on the rules of the plan. Most 401(k) plans I've worked with the max annual salary deferral is divided by 12 to determine max monthly contribution.

I'm not sure your sample is representative. In the 10 401(k) plans that I had throughout my career, none of them ever had a monthly limit calculated like that. All limits were all based on % of income that the employee could contribute, up to the deferral limit. The used to be a Federal law limiting the % of income that could be contributed to 25%, which is why many plans based their limits on a % of income. When the EGTRRA* (Economic Growth and Tax Relief Reconciliation Act) was passed in 2001, the legal limit on % of income was lifted, and just required that SS and Medicare taxes be withheld - which effectively limits anyone who makes less than the SS tax cap to 92.35% Many plans were slow to enact the new limits, and many still set limits lower than the max allowed.

*This was also the legislation that authorized Roth 401(k) accounts, although plans could not start offering Roth 401(k) accounts until 2006.

AJ
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