The IRS recently announced increased contribution limits for various qualified retirement plans for tax year 2013. The limitations are indexed to increases in cost-of-living (inflation) as per section 415 of the tax code. In particular, the elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500. However, the additional catch-up contribution allowed for those age 50 and higher remains $5,500.
The limits are the same for both Roth and “Traditional” pre-tax 401k plans, although the effective after-tax amounts can be quite different. Employer match contributions do not count towards the $17,000 elective deferral limit. (Although technically the total annual defined contribution limit is $51,000 for 2013… let me know if you have an employer that is so generous!) Curiously, some employer plans set their own limit on contributions. A former employer of mine had a 20% deferral limit, so if your income was $50,000 the most you could put away was $10,000 a year.
Here’s a historical chart and table of recent contribution limit increases:
| Year | 401k/403b Elective Deferral Limit | Additional Catch-Up Allowed (Age 50+) |
| 2007 | $15,500 | $5,000 |
| 2008 | $15,500 | $5,000 |
| 2009 | $16,500 | $5,500 |
| 2010 | $16,500 | $5,500 |
| 2011 | $16,500 | $5,500 |
| 2012 | $17,000 | $5,500 |
| 2013 | $17,500 | $5,500 |
Sources: IRS.gov, IRS.gov COLA Table [PDF]
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Yep I luck out and have an employer who utilizes IBA accounts. Allowing us to control everything. I get 25% into a personal spending account and 25% into my 401k/pension…… That allows me to put away the 50k or so max limit……
With the federal government TSP plan you get 5% of your contribution matched. What companys or intstitutions are beating that?
i wonder if as a business owner, I can give myself a more than generous match
@jose – I used to get a 6% match at a former employer, and I’ve heard of better ones. However, the most common appears to be half of all deferrals, up to 6% (3% net max). My wife’s employer adds another 1% if you max out the 401k, which I think is a nice incentive.
@xmasy – I’m not exactly sure, if you have more than one employee, are you willing to offer the same match for all of them? If you’re self-employed, you can use SEP or Solo 401k to get near the max, that’s what I do.
I’m so grateful for a better ‘market day for slaves’ from our DC masters with millions in the bank.
I used to work for a company that matched 12% on a 3% contribution. My wife’s former company matched 10% on a 10% contribution. Neither company exists anymore.
Where I work, we have a 6% company match– which we lost for about a year and half, but thankfully returned. There’s no auto-enrollment, and not everyone participates in the plan. We have different plans for management and union. Despite regular classes on how a 401k works, hardly anyone attends, and I believe there’s often confusion on how to invest. The fund selection is ok, there’s not a lot of index funds, and the mangement fees can be high for certain investments. They do have a feature though, if you choose to use it, that will automatically choose investments and allocations based on your age and a strategy you choose, that will automatically rebalance, and will change your investments as you grow older. I only wish we had a better selection of funds.
I think our reports on our 401k are rather nice, although I’ve never seen what others do, and am curious what information other companies may provide. Our 401k gives us estimates what our total could be when we’re of retirement age, what you could possibly expect monthly, and if you’re not already contributing the max, it’ll give you hypothetical outcomes if you increase you contributions by x%. On their website, they also have examples of people of various ages, in various positions and income levels, what they have saved, how much they’re contributing, and guidiance on what they can do to improve.