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2011 401k Contribution Limits: No change from previous years

Written by Tim Peak on April 3, 2011.

Investors will be realizing soon (if they haven’t already) that 401(k) contribution limits in the year 2011 haven’t changed from previous years.

This doesn’t come as much surprise given the lack of a stellar economy these days, but it’s undoubtedly going to upset many people.

For those unfamiliar with Individual Retirement Accounts, the limits placed on them are multiple.

First of all, there’s always a maximum contribution for 401(k)s.  These maximums depend on your annual income and age (among some other less common, less important factors).  For the most part it’s a safe assumption to believe that your personal maximum for your 401(k) is $16,500 per year (no exception for 2011).

It varies from plan to plan, but many plans don’t allow individuals to contribute past $6,000 per year, with exceptions for those over 60 years of age.  If the individual has more than one plan, their total 401(k) contribution for the calendar year of 2011 can’t surpass $16,500.

This has been the maximum for the past three years, when the total jumped up from $15,500.  It looks to hold true for the next several years, as well.

Furthermore, these retirement accounts face “catch-up” limits as well.  The circumstances surrounding the “catch-up” approach are extensive and detailed, but the bottom line:  they’re for people who started a 401(k) late or otherwise are trying to make up for lost time and money just short of entering into retirement.  Since 2004, the catch-up limits have been set at $5,500.  This means that there are two times a year when an individual can put in an additional $5,500 (assuming they meet a set criteria) that they otherwise wouldn’t have had the option to contribute.

Individuals aren’t the only ones faced with limitations when it comes to 401(k)s.  Those who have employers who match contributions—those employers are also going to face limitations.  Specifically, for those making less than $110,000 annually, their employer is only allowed to contribute $6,000.  This brings the total worth of a 401(k) up significantly, but it also means that (in theory) an employer cannot fully match the contribution of an individual for a 401(k) plan.

On top of that, if an individual is over 55 years old (or older), the situation is slightly different.  The individual then has the option of including an additional $5,500 into their 401(k) plan, in keeping with the “catch-up” rules.  In short, those over 55 have the potential to max out at $28,000 assuming they have an employer willing to contribute the maximum amount.

As well as their being contribution limitations, there are also withdrawal limitations.  No one setting up a 401(k) assumes they’re going to need the money they’re setting aside for retirement until the age of 55 or older, but in today’s unstable economy it’s entirely possible to need to take something out.

In short, there’s no method of withdrawing from your IRA that isn’t going to penalize you in some way.  There’s not a limitation in the form of how much you can take out (at least not one that’s government-imposed—your provider might have a different outlook, though) but whatever you take out is going to result in a large tax hit, no matter how you cut it.

There are government imposed penalties for withdrawing from your 401(k) early, plus it sets back the amount that accrues in your fund.

However, currently there exist a series of rules for hardship withdrawals.  In these cases, you must apply (using a federal form) for such a hardship, and if granted you’re able to withdrawal from your 401(k) with only a 10% tax penalty (you’ll face far worse if you don’t go the hardship route).

In these cases, foreclosure on one’s home or residence is considered the most pressing matter, allowing one to take money out at the reduced penalty rate.  Proof of eminent foreclosure is the deciding factor for a hardship withdrawal grant.

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    2011 401k Contribution Limits: No change from previous years

    Written by Tim Peak on April 3, 2011.

    Investors will be realizing soon (if they haven’t already) that 401(k) contribution limits in the year 2011 haven’t changed from previous years.

    This doesn’t come as much surprise given the lack of a stellar economy these days, but it’s undoubtedly going to upset many people.

    For those unfamiliar with Individual Retirement Accounts, the limits placed on them are multiple.

    First of all, there’s always a maximum contribution for 401(k)s.  These maximums depend on your annual income and age (among some other less common, less important factors).  For the most part it’s a safe assumption to believe that your personal maximum for your 401(k) is $16,500 per year (no exception for 2011).

    It varies from plan to plan, but many plans don’t allow individuals to contribute past $6,000 per year, with exceptions for those over 60 years of age.  If the individual has more than one plan, their total 401(k) contribution for the calendar year of 2011 can’t surpass $16,500.

    This has been the maximum for the past three years, when the total jumped up from $15,500.  It looks to hold true for the next several years, as well.

    Furthermore, these retirement accounts face “catch-up” limits as well.  The circumstances surrounding the “catch-up” approach are extensive and detailed, but the bottom line:  they’re for people who started a 401(k) late or otherwise are trying to make up for lost time and money just short of entering into retirement.  Since 2004, the catch-up limits have been set at $5,500.  This means that there are two times a year when an individual can put in an additional $5,500 (assuming they meet a set criteria) that they otherwise wouldn’t have had the option to contribute.

    Individuals aren’t the only ones faced with limitations when it comes to 401(k)s.  Those who have employers who match contributions—those employers are also going to face limitations.  Specifically, for those making less than $110,000 annually, their employer is only allowed to contribute $6,000.  This brings the total worth of a 401(k) up significantly, but it also means that (in theory) an employer cannot fully match the contribution of an individual for a 401(k) plan.

    On top of that, if an individual is over 55 years old (or older), the situation is slightly different.  The individual then has the option of including an additional $5,500 into their 401(k) plan, in keeping with the “catch-up” rules.  In short, those over 55 have the potential to max out at $28,000 assuming they have an employer willing to contribute the maximum amount.

    As well as their being contribution limitations, there are also withdrawal limitations.  No one setting up a 401(k) assumes they’re going to need the money they’re setting aside for retirement until the age of 55 or older, but in today’s unstable economy it’s entirely possible to need to take something out.

    In short, there’s no method of withdrawing from your IRA that isn’t going to penalize you in some way.  There’s not a limitation in the form of how much you can take out (at least not one that’s government-imposed—your provider might have a different outlook, though) but whatever you take out is going to result in a large tax hit, no matter how you cut it.

    There are government imposed penalties for withdrawing from your 401(k) early, plus it sets back the amount that accrues in your fund.

    However, currently there exist a series of rules for hardship withdrawals.  In these cases, you must apply (using a federal form) for such a hardship, and if granted you’re able to withdrawal from your 401(k) with only a 10% tax penalty (you’ll face far worse if you don’t go the hardship route).

    In these cases, foreclosure on one’s home or residence is considered the most pressing matter, allowing one to take money out at the reduced penalty rate.  Proof of eminent foreclosure is the deciding factor for a hardship withdrawal grant.

    Similar Posts:

    Share

    Post Comment

    2011 401k Contribution Limits: No change from previous years

    Written by Tim Peak on April 3, 2011.

    Investors will be realizing soon (if they haven’t already) that 401(k) contribution limits in the year 2011 haven’t changed from previous years.

    This doesn’t come as much surprise given the lack of a stellar economy these days, but it’s undoubtedly going to upset many people.

    For those unfamiliar with Individual Retirement Accounts, the limits placed on them are multiple.

    First of all, there’s always a maximum contribution for 401(k)s.  These maximums depend on your annual income and age (among some other less common, less important factors).  For the most part it’s a safe assumption to believe that your personal maximum for your 401(k) is $16,500 per year (no exception for 2011).

    It varies from plan to plan, but many plans don’t allow individuals to contribute past $6,000 per year, with exceptions for those over 60 years of age.  If the individual has more than one plan, their total 401(k) contribution for the calendar year of 2011 can’t surpass $16,500.

    This has been the maximum for the past three years, when the total jumped up from $15,500.  It looks to hold true for the next several years, as well.

    Furthermore, these retirement accounts face “catch-up” limits as well.  The circumstances surrounding the “catch-up” approach are extensive and detailed, but the bottom line:  they’re for people who started a 401(k) late or otherwise are trying to make up for lost time and money just short of entering into retirement.  Since 2004, the catch-up limits have been set at $5,500.  This means that there are two times a year when an individual can put in an additional $5,500 (assuming they meet a set criteria) that they otherwise wouldn’t have had the option to contribute.

    Individuals aren’t the only ones faced with limitations when it comes to 401(k)s.  Those who have employers who match contributions—those employers are also going to face limitations.  Specifically, for those making less than $110,000 annually, their employer is only allowed to contribute $6,000.  This brings the total worth of a 401(k) up significantly, but it also means that (in theory) an employer cannot fully match the contribution of an individual for a 401(k) plan.

    On top of that, if an individual is over 55 years old (or older), the situation is slightly different.  The individual then has the option of including an additional $5,500 into their 401(k) plan, in keeping with the “catch-up” rules.  In short, those over 55 have the potential to max out at $28,000 assuming they have an employer willing to contribute the maximum amount.

    As well as their being contribution limitations, there are also withdrawal limitations.  No one setting up a 401(k) assumes they’re going to need the money they’re setting aside for retirement until the age of 55 or older, but in today’s unstable economy it’s entirely possible to need to take something out.

    In short, there’s no method of withdrawing from your IRA that isn’t going to penalize you in some way.  There’s not a limitation in the form of how much you can take out (at least not one that’s government-imposed—your provider might have a different outlook, though) but whatever you take out is going to result in a large tax hit, no matter how you cut it.

    There are government imposed penalties for withdrawing from your 401(k) early, plus it sets back the amount that accrues in your fund.

    However, currently there exist a series of rules for hardship withdrawals.  In these cases, you must apply (using a federal form) for such a hardship, and if granted you’re able to withdrawal from your 401(k) with only a 10% tax penalty (you’ll face far worse if you don’t go the hardship route).

    In these cases, foreclosure on one’s home or residence is considered the most pressing matter, allowing one to take money out at the reduced penalty rate.  Proof of eminent foreclosure is the deciding factor for a hardship withdrawal grant.

    Similar Posts:

    Share

    Post Comment

    2011 401k Contribution Limits: No change from previous years

    Written by Tim Peak on April 3, 2011.

    Investors will be realizing soon (if they haven’t already) that 401(k) contribution limits in the year 2011 haven’t changed from previous years.

    This doesn’t come as much surprise given the lack of a stellar economy these days, but it’s undoubtedly going to upset many people.

    For those unfamiliar with Individual Retirement Accounts, the limits placed on them are multiple.

    First of all, there’s always a maximum contribution for 401(k)s.  These maximums depend on your annual income and age (among some other less common, less important factors).  For the most part it’s a safe assumption to believe that your personal maximum for your 401(k) is $16,500 per year (no exception for 2011).

    It varies from plan to plan, but many plans don’t allow individuals to contribute past $6,000 per year, with exceptions for those over 60 years of age.  If the individual has more than one plan, their total 401(k) contribution for the calendar year of 2011 can’t surpass $16,500.

    This has been the maximum for the past three years, when the total jumped up from $15,500.  It looks to hold true for the next several years, as well.

    Furthermore, these retirement accounts face “catch-up” limits as well.  The circumstances surrounding the “catch-up” approach are extensive and detailed, but the bottom line:  they’re for people who started a 401(k) late or otherwise are trying to make up for lost time and money just short of entering into retirement.  Since 2004, the catch-up limits have been set at $5,500.  This means that there are two times a year when an individual can put in an additional $5,500 (assuming they meet a set criteria) that they otherwise wouldn’t have had the option to contribute.

    Individuals aren’t the only ones faced with limitations when it comes to 401(k)s.  Those who have employers who match contributions—those employers are also going to face limitations.  Specifically, for those making less than $110,000 annually, their employer is only allowed to contribute $6,000.  This brings the total worth of a 401(k) up significantly, but it also means that (in theory) an employer cannot fully match the contribution of an individual for a 401(k) plan.

    On top of that, if an individual is over 55 years old (or older), the situation is slightly different.  The individual then has the option of including an additional $5,500 into their 401(k) plan, in keeping with the “catch-up” rules.  In short, those over 55 have the potential to max out at $28,000 assuming they have an employer willing to contribute the maximum amount.

    As well as their being contribution limitations, there are also withdrawal limitations.  No one setting up a 401(k) assumes they’re going to need the money they’re setting aside for retirement until the age of 55 or older, but in today’s unstable economy it’s entirely possible to need to take something out.

    In short, there’s no method of withdrawing from your IRA that isn’t going to penalize you in some way.  There’s not a limitation in the form of how much you can take out (at least not one that’s government-imposed—your provider might have a different outlook, though) but whatever you take out is going to result in a large tax hit, no matter how you cut it.

    There are government imposed penalties for withdrawing from your 401(k) early, plus it sets back the amount that accrues in your fund.

    However, currently there exist a series of rules for hardship withdrawals.  In these cases, you must apply (using a federal form) for such a hardship, and if granted you’re able to withdrawal from your 401(k) with only a 10% tax penalty (you’ll face far worse if you don’t go the hardship route).

    In these cases, foreclosure on one’s home or residence is considered the most pressing matter, allowing one to take money out at the reduced penalty rate.  Proof of eminent foreclosure is the deciding factor for a hardship withdrawal grant.

    Similar Posts:

    Share

    Post Comment

    2011 401k Contribution Limits: No change from previous years

    Written by Tim Peak on April 3, 2011.

    2011 401k Contribution Limits: No change from previous years

    Written by Tim Peak on April 3, 2011.

    Investors will be realizing soon (if they haven’t already) that 401(k) contribution limits in the year 2011 haven’t changed from previous years.

    This doesn’t come as much surprise given the lack of a stellar economy these days, but it’s undoubtedly going to upset many people.

    For those unfamiliar with Individual Retirement Accounts, the limits placed on them are multiple.

    First of all, there’s always a maximum contribution for 401(k)s.  These maximums depend on your annual income and age (among some other less common, less important factors).  For the most part it’s a safe assumption to believe that your personal maximum for your 401(k) is $16,500 per year (no exception for 2011).

    It varies from plan to plan, but many plans don’t allow individuals to contribute past $6,000 per year, with exceptions for those over 60 years of age.  If the individual has more than one plan, their total 401(k) contribution for the calendar year of 2011 can’t surpass $16,500.

    This has been the maximum for the past three years, when the total jumped up from $15,500.  It looks to hold true for the next several years, as well.

    Furthermore, these retirement accounts face “catch-up” limits as well.  The circumstances surrounding the “catch-up” approach are extensive and detailed, but the bottom line:  they’re for people who started a 401(k) late or otherwise are trying to make up for lost time and money just short of entering into retirement.  Since 2004, the catch-up limits have been set at $5,500.  This means that there are two times a year when an individual can put in an additional $5,500 (assuming they meet a set criteria) that they otherwise wouldn’t have had the option to contribute.

    Individuals aren’t the only ones faced with limitations when it comes to 401(k)s.  Those who have employers who match contributions—those employers are also going to face limitations.  Specifically, for those making less than $110,000 annually, their employer is only allowed to contribute $6,000.  This brings the total worth of a 401(k) up significantly, but it also means that (in theory) an employer cannot fully match the contribution of an individual for a 401(k) plan.

    On top of that, if an individual is over 55 years old (or older), the situation is slightly different.  The individual then has the option of including an additional $5,500 into their 401(k) plan, in keeping with the “catch-up” rules.  In short, those over 55 have the potential to max out at $28,000 assuming they have an employer willing to contribute the maximum amount.

    As well as their being contribution limitations, there are also withdrawal limitations.  No one setting up a 401(k) assumes they’re going to need the money they’re setting aside for retirement until the age of 55 or older, but in today’s unstable economy it’s entirely possible to need to take something out.

    In short, there’s no method of withdrawing from your IRA that isn’t going to penalize you in some way.  There’s not a limitation in the form of how much you can take out (at least not one that’s government-imposed—your provider might have a different outlook, though) but whatever you take out is going to result in a large tax hit, no matter how you cut it.

    There are government imposed penalties for withdrawing from your 401(k) early, plus it sets back the amount that accrues in your fund.

    However, currently there exist a series of rules for hardship withdrawals.  In these cases, you must apply (using a federal form) for such a hardship, and if granted you’re able to withdrawal from your 401(k) with only a 10% tax penalty (you’ll face far worse if you don’t go the hardship route).

    In these cases, foreclosure on one’s home or residence is considered the most pressing matter, allowing one to take money out at the reduced penalty rate.  Proof of eminent foreclosure is the deciding factor for a hardship withdrawal grant.

    Similar Posts:

    Share

    Investors will be realizing soon (if they haven’t already) that 401(k) contribution limits in the year 2011 haven’t changed from previous years.

    This doesn’t come as much surprise given the lack of a stellar economy these days, but it’s undoubtedly going to upset many people.

    For those unfamiliar with Individual Retirement Accounts, the limits placed on them are multiple.

    First of all, there’s always a maximum contribution for 401(k)s.  These maximums depend on your annual income and age (among some other less common, less important factors).  For the most part it’s a safe assumption to believe that your personal maximum for your 401(k) is $16,500 per year (no exception for 2011).

    It varies from plan to plan, but many plans don’t allow individuals to contribute past $6,000 per year, with exceptions for those over 60 years of age.  If the individual has more than one plan, their total 401(k) contribution for the calendar year of 2011 can’t surpass $16,500.

    This has been the maximum for the past three years, when the total jumped up from $15,500.  It looks to hold true for the next several years, as well.

    Furthermore, these retirement accounts face “catch-up” limits as well.  The circumstances surrounding the “catch-up” approach are extensive and detailed, but the bottom line:  they’re for people who started a 401(k) late or otherwise are trying to make up for lost time and money just short of entering into retirement.  Since 2004, the catch-up limits have been set at $5,500.  This means that there are two times a year when an individual can put in an additional $5,500 (assuming they meet a set criteria) that they otherwise wouldn’t have had the option to contribute.

    Individuals aren’t the only ones faced with limitations when it comes to 401(k)s.  Those who have employers who match contributions—those employers are also going to face limitations.  Specifically, for those making less than $110,000 annually, their employer is only allowed to contribute $6,000.  This brings the total worth of a 401(k) up significantly, but it also means that (in theory) an employer cannot fully match the contribution of an individual for a 401(k) plan.

    On top of that, if an individual is over 55 years old (or older), the situation is slightly different.  The individual then has the option of including an additional $5,500 into their 401(k) plan, in keeping with the “catch-up” rules.  In short, those over 55 have the potential to max out at $28,000 assuming they have an employer willing to contribute the maximum amount.

    As well as their being contribution limitations, there are also withdrawal limitations.  No one setting up a 401(k) assumes they’re going to need the money they’re setting aside for retirement until the age of 55 or older, but in today’s unstable economy it’s entirely possible to need to take something out.

    In short, there’s no method of withdrawing from your IRA that isn’t going to penalize you in some way.  There’s not a limitation in the form of how much you can take out (at least not one that’s government-imposed—your provider might have a different outlook, though) but whatever you take out is going to result in a large tax hit, no matter how you cut it.

    There are government imposed penalties for withdrawing from your 401(k) early, plus it sets back the amount that accrues in your fund.

    However, currently there exist a series of rules for hardship withdrawals.  In these cases, you must apply (using a federal form) for such a hardship, and if granted you’re able to withdrawal from your 401(k) with only a 10% tax penalty (you’ll face far worse if you don’t go the hardship route).

    In these cases, foreclosure on one’s home or residence is considered the most pressing matter, allowing one to take money out at the reduced penalty rate.  Proof of eminent foreclosure is the deciding factor for a hardship withdrawal grant.

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