Do Employer 401k Contributions Count Toward the Max?

Short answer - no. In a 401(k) the employer match does not count towards the annual maximum contribution. In 2006 the IRS limits your maximum contribution to $15,000 (plus $5,000 catch-up contribution for those over the age of 50). In 2007 the contribution limit is $15,500. The 2008 401k contirbution limit is $15,500.

Learn how to max out your 401k contribution.

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Comments (9)


Total match has to be under $44,000 and how you get to that number doesn't matter. Company contributions can be upto 25% percent of your salary, $15,000 personal contribution and any combination of the two can be used to achieve the $44,000.

Obviously, this only matters if you either own your own business or there is a C at the beginning of your title.

I am planning a detailed write up on the benefits of 401k tax sheltering for small side businesses, but I have not finished it up yet.

Good! I contribute 25% and I was going to be pretty disappointed if the company match counted toward the 15k.

Actually, I didn't even think about it until I read the post. I need to be on top of my game more.

So if you own your own business there is no way to max that out before your salary is $116,000?

For your first $15,000 salary you could contribute 100% on a personal level (which you can do before you pay taxes on it). Then you'd need 4x$29,000 because the company can only contribute a maximumn of 25% of your income?

Does anyone do anything like that?

Successful Personal Finance

I am a "highly compensated employee" at my company. This status results in my maximum 401k contribution to be significantly less than the $15,000 allowed by law. Question, is there a tax deffered retirement method/instrument, outside of my companies plan, that I can contribute to to enable me to max out my allowable $15,000?

Thanks,

Congrats on being a highly compensated employee!

Best consult an expert, but I will tell you what I would do. 1) I don't think your high compensation is keeping you from contributing the max - its the high compensation and the low contributions of everyone else at the company -- its time to promote the 401(k) to the rest of your fellow employees!

2) The only other real way to take advantage of this is with self-employment income - you could open a solo 401(k) or other retirement plan as some of them will allow you to make contributions. the total of contributions from some of your self-employment retirement plan options and your employee 401(k) would be 15k. There is a lot of extra details on self-employment retirement plans that i am skipping so read up.

My husband's company does not offer 401(k). Does that mean I can contribute 30k/year (15k*2) max?

My understanding is no. You can only contribute up to the max (currently $15k) per person.

My suggestion would be to look at whether it would be more benefical for you husband to become a contractor ( self -employed) so he could set up his own retirement plan (SEP IRA, self employed 401(k), etc).

It should be noted also that employer contributions do, in fact, count towards the total contribution if the match is greater than 6%.

If i make $150,000.00 2008 what the maximum i can contributionthe in to 401K , 403b,

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