What Are The 2011 401k Contribution Limits?

As tax time quickly approaches, investors planning their tax strategies must understand the 2001 401k contribution limits. Unfortunately, investors looking to make a quick catch up in their 401ks will be disappointed with the 2011 401k contribution limits—they’re stuck!

Static 2001 401k Contribution Limits

Those looking to take out their concerns should blame the inflation-rate. With consumer price levels virtually flat following an awful economic downturn, the Federal Government has kept 2011 401k contribution limits static. This decision is in line with no changes in social security payouts and caps on many state and local pension programs as well.

For the third year running, contribution limits for 401k accounts will be kept to $16,500. Thus, most everyone with a pre-tax contribution account will be able to invest only $16,500 toward retirement in their employer sponsored plan. However, there are a few exceptions.

Late Savers Benefit Most

The catch up limits, though also stuck at $5,500, provide some opportunity for those late in their retirement savings to pick up the pace. In order to qualify for the catch up restrictions, savers must be at least 50 years old before the end of a single calendar year.

When an investor turns fifty is of importance. Where an individual can invest in an IRA all the way up to the day taxes are due, 401k contributions within the limits must be made before the end of a calendar year. Those who turn 50 in 2011 can contribute a total of $22,000 toward their 401k, and they may contribute the entire sum at the beginning of the year, if they so wish, even if they are still only 49 at the time of the investment.
Tim Ord
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