When the IRS announced that there would be changes on the limits for 401K 2015 contributions last October 23, 2014, a good number of plan holders thought that their limits will greatly affect their ability to add funds to their accounts. The changes were made due to the adjustments in the population’s cost of living. Now, as regards to the annual contribution limits 401k plan holders found that there would be an increase in the maximum contributions for those who belong to the below 50 and above 50 age brackets, respectively. The catch-up contribution limit also changed as well. For 2016, the limits stay at the same level as 2015.
Before one focuses on meeting the maximum contribution to 401k, it is important to know when the last day of completing their contribution requirements would be to ensure that they will not be able to miss out on their deposits or payments.
Employee and Employer Contribution Deadline
Meeting your contribution deadline would greatly mean that you will be able to enjoy the full benefits that your 401k account can provide. And in order to make sure that you do not miss out and meet your contribution limits, 401k plan holders or employees are required to complete them either through their deferred last salary or paycheck as specified by the 401k contribution deadline.
As for employers, their deadline would be the tax filing date of 15th of April, 2016. The deadline may be extended.
Contribution Limits 401k for Employee and Employer
Since 401ks are offered by the employers, meeting contribution limits is a responsibility shared by both the employee and the employer. The following are the contribution limits that you need to keep in mind:
- Employees
- Below the age of 50 – $18,000
- Catch-up contributions for those above 50 years old – $6,000 above the prescribed maximum contribution limit, bringing the total to $24,000.
- Employers
- for their employees below the age of 50 – $ 53,000
- for their employees 50 years old and above – $59,000
Take note the contributions to 401(k) can change based on the current state of the economy and of course any developments in the cost of living.
Knowing how 401k works would really help people understand the importance of making contributions and preparing for their future. And processes such as meeting deadlines and contribution limits 401k owners will be able to strategize how to divide their paychecks appropriately.
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