What are 401(k) Contribution Limits?
The 401(k) contribution limits are limits set each year, some by an employer and some by the government, that largely determine how much an employee may want to contribute into a retirement plan. However, it should be noted 401k contribution limits often do not limit the amount that can be contributed, but rather limit some of the benefits 401ks provide. These benefits include tax deferments and employee contributions. Employers will often match a contribution to a 401(k) plan. This match could be dollar for dollar or less than that, depending on the type of 401(k) plan owned. However, there are some types of 401(k) plans that do require a dollar-for-dollar match. If there is an employer match, then it is very likely that employer will propose 401(k) contribution limits, simply so that it does not become too cumbersome of a program to fund. These limits may be based on a percentage of the employee’s salary. Often, there is a wide range of percentages, based on the individual employer’s
