I recently moved to the USA from the UK and have an apparently simple question I am unable to find the answer to.I am aware there are limits of $10500 for contributions to 401k plans in 2001 but are company match/contributions excluded from this total? Ie. Can I contribute $10500 pre-Tax AND still have a few $1000s company match in addition?Thanks in advance.Terry.
Any company contributions are excluded from this dollar amount.The rules change for 2002.The current rule is: Any employee may contribute up to $10,500 in pre tax dollars as long as this does not exceed 25% of total pay.The employer contribution is subject to limits as well and that is tied to what the employee puts in. The total amount received into the 401k plan by any 1 person can not exceed $35,000 or 25% of pay.Here is an example. If you make $100,000 you may contribute $10,500,which equals 10.5% of your pay. Your employer may then contribute another 14.5%. This would bring you up to the 25% combined limit.For 2002. The employee contributions are not linked to the employer, so an employee may put in as much as he or she wants not to exceed $11,000. There is no percentage limit in 2002. So a person making $22,000 can put 50% of their income away.The employer may then contribute an additional 25% of pay. The only limitation is that employee + Employer contributions cannot exceed $40,000 or 100% of pay.Hope this made sense, the U.S Internal Revenue Service likes tomake things a twisted as possible. It keeps s rom questionong their authority to take our money. If we can't understand what they are doing, how can we possibly argue against them.Anyway, I hope this helped, if not please respond with follow up questions.Bill
Hope this made sense, the U.S Internal Revenue Service likes tomake things a twisted as possible. It keeps s rom questionong their authority to take our money. If we can't understand what they are doing, how can we possibly argue against them.<<<<<<<<<<I understand the frustration but it is misdirected - Congress, NOT the IRS, came up with these rules. Your scorn should be directed at the appropriate target - your elected officials. There are plenty of other reasons to be scornful of the IRS but the complexity of the Internal Revenue Code is not its fault.
Its more fun to blame the IRS. They are a much easier target. True, Congress creates these wacky codes, but the IRS enforces them. Plus its a faceless organization which makes it so much easier to pick on them. If you work for the IRS, then of course I am just kidding and they are the best darn organization in the world.You are correct, the blame lies with the legislators.Bill
You're right, the IRS is easier. In fact, Congress often uses the IRS as the scapegoat. I just get disgusted when I see what those lunatics come up with. Just look at EGTRRA. Sure, its got a lot of beneficial stuff in it but why did they have to make it all so damn complicated. Phase-ins, phase-outs, and the whole thing sunsets too. What a damn mess!
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