How much can an eligible employee contribute to a 401(k) plan?
An eligible employee may generally contribute anywhere from 1% to 20% of salary. The 2001 pre-tax limit for contributions is $10,500; for 2002, the limit is $11,000, increasing each subsequent year until reaching $15,000 in 2006. Then it will increase with indexing (in $500 increments) after 2006. Beginning in 2002 plan participants who are age 50 or older (by 12/31 of the relevant plan year) can make pre-tax “catch-up contributions” in addition to regular contributions. For 2002, the catch-up limit is $1,000, increasing each subsequent year until $5,000 in 2006. Then it will increase with indexing in $500 increments after 2006.
