Maximum 401(k) Contribution Rises to $17,000 Next Year

WASHINGTON (AP) – October 20, 2011

The Internal Revenue Service is boosting the maximum pre-tax contribution workers can make to their 401(k) pension plans. The limit will rise to $17,000 next year.

The increase, required by law to adjust for inflation, is $500 higher than this year’s level. The ceiling hadn’t grown since 2009 because inflation has been too low to trigger an increase.

Companies that set up 401(k) plans for their employees are free to limit maximum contributions at levels below the legal ceiling, and many do.

Thirty-three percent of workers age 21-64 used 401(k) plans in 2009, the most recent year for which figures are available. That’s according to the Employee Benefit Research Institute, a non-partisan research group that advocates strong employee benefit programs.

Copyright 2011 The Associated Press.

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