Under current tax laws, if you do not have outside restrictions (see below), you should be able to contribute $22,000 to your company 401k if you are 50 years of age or better.
According to the IRS’s current Catch Up contribution rules individuals age 50 or over are able to contribute an extra $5500 into their 401k retirement plans, bringing the total for 2011 from $16,500 to $22,000 (2012: $17,000 to $22,500.)
If you fall into this young age category, take a peek at your latest paycheck to confirm “YTD Deferrals Into 401k” is either close, or at the above mentioned maximum.
- You may be limited by highly compensated issues that override your ability to defer the max into the plan, you can call HR to confirm.
- Your employer may have forgotten to up your maximum (make a call to HR to confirm.)
- If you are short, and can put more money into the plan, ask your employer if you can defer an extra amount over the next several pay periods. (I apologize, it is the holiday season, but it will help the numbers at tax time next year.)
- If you are short, and cannot fill up the plan this year, not to worry, just let HR know you would like to be sure and make a maximum contribution for next year. Better eventually, than never, and be sure to spread that deferral evenly throughout the year!
We hope you enjoyed another tax saving tip. We understand many of these tips are very near the end of the year, however, we often find this information is more receptive to us all at this time. OH, and again, we are not recommending tax advice, as each situation is different.
Have a Great Day!