What is the Maximum 401k Contribution? How Much is It?

Saving up for your retirement should not be confusing. After all, you are doing this so that you can enjoy and reap the rewards of your hard earned money. However, because of some rules and regulations regarding rollover options, maximum contribution, and other issues, people sometimes find themselves lost along the way. What is the maximum 401k contribution per year? How is it computed? Hopefully this will shed some light in this issue. More importantly, let’s hope this will help people make informed decisions for their own plans.

In 2009, the maximum 401k contribution has changed a bit. From 2008’s $15,500, the maximum contribution has increased to $16,500 in 2009. For people aged above 50 years, the new catch-up contribution is $22,000. What are the implications of these changes?

If you are privileged and fortunate enough to be able to max out your plan this year, and over the year you use the dollar cost advantage, you may need some adjusting with regards to the percentage that you contribute every pay period. Your 2009 levels are not the same anymore with your 2008 levels.

In order to compute how much you have to contribute to maximize out your 401k in 2009, all you have to do is simply take $16,500 divided by your income or salary. For example if you are earning $75,000 annually, simply divide $16,500 by $75,000 (21.3%). Work with your 401k administrator and make sure that you contribute 21.3% to max out your 401k.

Knowledge in the maximum 401k contribution is definitely helpful. Always know how much you need to allocate for it so that you can foresee and avoid mishaps and miscalculations in the future.

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