What Are the 401k Plan Limits?
There are several “limits” that apply to 401k plans under the Internal Revenue Code (IRC). The limits are found in various sections of the IRC. 401k plans must comply with the various IRC limits to maintain tax-qualified status. The Internal Revenue Service (IRS) annually increases 401k plan limits to reflect changes in the Consumer Price Index (CPI). Often, adjustments are made only if the change in the limit attributable to the CPI exceeds a certain threshold (e.g., $1,000 or $5,000).
On October 28, 2010 the IRS announced 401k plan limits for tax year 2011. Due to continued low inflation, the most significant 401k plan limits will remain unchanged for the third year in a row.
The table below shows the primary 401k plan limits in effect for tax years 2008 through 2011. Brief descriptions of the various limits are also provided.
| Maximum Deferral and Threshold Limits for 2008 – 2011 | ||||
|---|---|---|---|---|
| Limit | 2008 | 2009 | 2010 | 2011 |
| Elective Deferral Maximum for 401(k) Plans and 403(b) Plans – IRC § 402(g)(1) | $15,500 | $16,500 | $16,500 | $16,500 |
| Elective Deferral Maximum for 457 Plans – IRC § 457(e)(15) – (below note a) | 15,500 | 16,500 | 16,500 | 16,500 |
| Catch-Up Limit (Age 50 and Older) for 401(k), 403(b), and 457 Plans – IRC § 414(v)(2)(B)(i) | 5,000 | 5,500 | 5,500 | 5,500 |
| Maximum Contribution to a Qualified Defined Contribution Plan – IRC § 415(c)(1)(A) – (below note c) | 46,000 | 49,000 | 49,000 | 49,000 |
| Maximum Compensation Limit – IRC § 401(a)(17) – (below note d) | 230,000 | 245,000 | 245,000 | 245,000 |
| Highly Compensated Employee Salary Threshhold – IRC 414(q)(1)(B) | 105,000 | 110,000 | 110,000 | 110,000 |
| IRA Contribution Limit | 5,000 | 5,000 | 5,000 | 5,000 |
| IRA Catch-Up Limit (Age 50 and Older) – IRC § 219(b)(5)(B)(ii) | 1,000 | 1,000 | 1,000 | 1,000 |
| Social Security Maximum Taxable Earnings – OASDI | 102,000 | 106,800 | 106,800 | 106,800 |
