401(k) Contribution Limits for 2006
If you have a 401(k) plan that you participate in, then congratulations. If you
are eligible to participate in a plan but do not, then why? We would be
happy to talk with you to help you understand the potential benefits. There
are a few cases where participation might not be desirable, and if you
think you are in that situation we would be happy to talk to you about those
Tha maximum contribution one can make to their 401(k) plan in 2006
is increasing to $15,000. If your company makes matching contributions then
you should take advantage of that. In some cases it is important to set your
contribution level so as to participate in the company matching for every
pay cycle of the year. If you are not sure how your plan works, we can help
you look at that and then determine your best contribution rate.
You are eligible to make the additional catch-up contributions beginning the
year in which you turn 50 years old. In other words, anyone born in 1956 or
earlier make take advantage of this extra contribution limit during 2006.
The amount you can contribute is $5,000. This is in addition to the regular
limit of $15,000. That means you could contribute up to $20,000 during 2006.
All of that is normally tax defered, meaning you will not pay income tax
on the amount. Effectively this means that the government desires to help
you save for retirement. What a deal!