Q:

How do you determine your maximum 401(k) contributions in a given year?

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Quick Answer

The best source for determining the maximum contributions to a retirement fund like a 401(k) is the Internal Revenue Service (IRS) page dedicated to the subject of retirement. The IRS page provides the information for the current year and the previous year to users so that they know what limits they have and any penalties or fees they may have caused themselves if they went above that limit. According to the IRS page, different limits apply to people over the age of 50 due to catch-up options provided to anyone past that age on some plans

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Full Answer

People looking for help figuring how much they can add may find apps on sites such as the Financial Industry Regulatory Authority helpful. This calculator will show users how much their max contribution can be. According to the instructions provided by FIRA, users can then put in how much they have put into their 401(k) so far and the number of pay periods remaining for the year. Once they hit submit, the site tells them exactly how much, down to the penny they can deposit into their retirement fund and how much they have remaining till their maximum. Most 401(k) programs, unlike health insurance, can be adjusted throughout the year as needed to maximize benefits. This ability varies depending on the investment company and how the employer has an employee's benefits set up.

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