Why does my employer (or is it the government) cap my annual percentage contributions at 26%?
Why does my employer (or is it the government) cap my annual percentage contributions at 26%?
Current 401k rules limit employee contributions for 2011 to a maximum of $16,500. I would assume you are restricted to 26% because this represents what $16,500 is as a percentage of your $63,461 annual salary?
16,500 / 0.26 = 63,461.53
No, I am limited to 16% of my annual income in pre-tax deductions. I was told I can invest up to 26% (16% pre-tax and 10% post-tax) annually. I make far more the 65K/year. I make more than >3x that amount!
Post tax you can invest as much as you want, anywhere that you want.
Maybe start buying various typess of real estate property.
I've maxed out my 401k for the past 21 years. Some of those years I made a considerable amount of 1099 income where I contributed even more to a SEP. I will probably retire in 10-15 years and without other investments it won't be near enough.
The only thing the government limits is a total of $16,500 contributed for the entire year. The max percentage you are allowed to contribute from your paycheck is up to your company. The past two companies i've worked for the max % I could contribute was 50% for one, and 25% for the other. I have no idea why companies put their own caps.
brogan1 wrote:
The only thing the government limits is a total of $16,500 contributed for the entire year. The max percentage you are allowed to contribute from your paycheck is up to your company. The past two companies i've worked for the max % I could contribute was 50% for one, and 25% for the other. I have no idea why companies put their own caps.
Its because the government shouldn't be deciding how much benefit you get. What if they said you could only get 25% because that's all that is "fair"? Be glad your company sets the caps, otherwise you may not get anything...
Your 401Ks accounts are going to be destroyed by inflation. Cash them out and invest in GOLD/SILVER.