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401(k) Contribution Limits for 2009

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If you contribute to a 401(k) plan, you may be happy to hear that this year’s contribution maximum is increasing. In 2008, the tax code allowed employees to contribute up to $15,500. Anyone who turned 50 years old in 2008 could also add a catch-up contribution of $5,000 above this limit, bringing the maximum to $20,500 for these employees.

In 2009, the basic maximum for 401(k) contributions is $16,500. Employees 50 and older can add an additional $5,500. These limits take your pre-tax, after-tax, and Roth 401(k) contributions into consideration, so the sum of all your 401(k) contributions in 2008 cannot exceed the limit for your age group.

I fell short of contributing up to the maximum in 2008, but only by about $1,000 or $1,500. That’s mainly due to bad planning and changing my contributions throughout the year. The other danger is to set your contribution rate too high and miss out on the employer matching contributions. My new contribution rate for 2009 is set to bring me to the maximum based on my current salary.

In this economy, though, anything can happen. I may receive a substantial raise or I could be laid off. I can only plan using the knowledge I have right now.

Published or updated January 1, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

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