401(k)s & IRAs For Dummies

Chapter 15

Making Contributions

IN THIS CHAPTER

Seeing how much you can save

Having contributions made for you

Getting the timing right

The people in power — from legislators to employers to you — know that investing in a retirement plan is smart. However, those same legislators and employers set some limits on how much you can put into a retirement savings account. On the plus side, the employer, at least, may make deposits into your account while you work for them, and eventually, those employer contributions become yours.

This chapter goes through the limits on how much you and your employer can put into your account and talks about when an employer’s contributions can become yours.

Checking Out How Much You Can Contribute

“How much can I contribute to my retirement plan?” seems like a fairly simple question. However, the answer isn’t as straightforward as you may think. The federal government sets limits on contributions, but your 401(k) plan is allowed to be more restrictive. Also, high-income earners may have their contribution levels capped due to special restrictions required by law. (I explain rules for highly compensated employees in more detail in Chapter 12.)

Gauging ...