401(k) Maximum Contributions - 100%?

[Guest Mariko]

I still haven't thought through all of the details, so there are probably still holes in my logic

Under the new 415 limitations, would it be possible to increase the 401(k) contribution percentage limits in Qualified Plans to 100% of comp? Certainly participants would still be subject to 402(g) limits. Most 401(k) Plan documents limit 401(k) contributions to 15%-25% so that participants will not exceed 415 limits. Since the 415 limit has been increased to 100% for PY 2002, is there a reason why the 401(k) deferral limit in the Plan Doc couldn’t be raised to 100%?

[Jon Chambers]

Due to other mandatory withholding, such as Social Security and employer paid healthcare premiums, employers aren't considering permitting 100% elections for 401(k) contributions. But some are considering permitting 80% or 90% elections. Personally, I'm in favor of 50%--it's still a lot, it's a nice round number, and it leaves plenty of room for other withholding.