401K for Dummies - How much can I put in?

[Guest fsutaylor31]

I want to contribute a great deal to 401K since I am 26 and have never started one as of now. Are there any limitations on how much I can contribute per year?

Also, my employer matches up to 6%. Does that count against my limit of how much I personally put in?

For example, lets say I want to put in 10,000 a year (which is my hypothetical maximum amount). Would I need to deduct the 6% from this to not exceed the maximum?

Thanks,

Brian

[david rigby]

No.

Your employer has a booklet describing the plan provisions. Called the "summary plan description", your first action should be to request one of these. Your second action should be to read it.

[Guest THess]

The Summary Plan Description will state if the employer imposes a "plan limit". If the employer doesn't impose a "plan limit" (limiting the amount you can defer), the general rule is that you can (personally) defer $13,000 for 2004 and $14,000 for 2005. This has no affect on what the employer puts in (i.e., the matching contribution does not count against what you put in), unless one or a combination of both exceeds your total compensation.

Also keep in mind that your employer may match "up to" 6% but that doesn't necessarily mean he/she will match 100% of that 6%. He/she may only match 50% up to 6%, or 25% up to 6%, or 75% up to 6%, etc.

Does this help?