Greetings,I received a notice today that the contribution rate on my 401k account has increased from %15 to %50 percent of salary! I was amazed at this announcement. Especially since I was asking this question not long ago.Now I can contribute to the 2002 IRA and "catch-up" for the 2003 401k contribution later this year!
50% ??? I've never heard of a contribution rate that high. You should verify that. You will still be subject to the IRS yearly maximum for your contribution. I believe that is $12,000 for 2003.
50% ??? I've never heard of a contribution rate that high. You should verify that. You will still be subject to the IRS yearly maximum for your contribution. I believe that is $12,000 for 2003 The company I work for allows for up to 50%, but like you said it's limited to the IRS limits.
There is no longer any legal reason for a percentage contribution limit. The maximums are subject to the yearly maximum contribution. The availability of a high contribution limit allows catch-up if you are employed only part of a year and those with lower incomes to reach the contribution limit. What is strange with our contribution limits is that regular contributions, pre and post tax, are limited to 16% but contribution for the over 50 catch-up has a 50% limitation. The employee needs to becareful about how the employer match is calculated. Ours is per pay period, which means that at least 6% must be contributed every pay period to maximize the company match. With the 16% contribution limit it is not possible to guarantee absolutely maximize contributions and company match. It is possible to be close. Debra
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