401k Contribution Limits For 2008
For the people who want to save money for the future, 401k is one of the best options. The Government of United States did not make any drastic changes in the 401k contribution limits for 2008. It is in the section 415, that the limits have been revised. For the people who have been missing or postponing their contributions to 401k, this is the best time to make payments. According to Merril Lynch and a number of other experts never have you had such an opportunity to get more and more financial stability.
All of us have to retire early or later. Our body would not be as fit for all the life. This makes it important that we should do future planning right from the beginning and what can be a better way to do this than get a 401k. There are a number of reasons which make 401k the best option for people. First of all the contributions are made pre-tax. Moreover in comparison to other plans, the contribution limits are much higher. This means that you can save more money.
The Government of United States and the Internal Revenue Service(IRS) have decided that in the year 2008, the limit to employee contribution for 401k is marked at $15, 500. The Elective Salary Deferral system becomes applicable here. It is possible for the employer to put a ceiling of as much as 10% of the salary that can be contributed. This means that for the people whose income percentage is lower than the ceiling, the maximum possible contribution for 2008 would also go lower.
For the people whose employers do not impose the percentage restrictions, there can be no better deal. They can contribute as much as the limit that is set by the government. As the employer is also required to make contributions, that would be an added advantage. Naturally you can not expect the company to make contribution on a dollar to dollar basis. Even if the company makes a contribution of 50 cents on every dollar contributed by you, what more can you ask for! On the negative side, most of the people were expecting a raise in the 'catch up' contribution. There were a number of rumors but all of them went up poof like a wisp of smoke when the final contribution limits were declared. In case of the people who are self employed, there are few better options that you can ask for. People are allowed a limit as high as 25% where a profit sharing contribution is made. This can be as high as $46000 in certain cases. All in all the rule and regulations of 401k contribution limits have never been as saver friendly as they are in the present conditions.
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