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Lawrence blau & associates, llc

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401K rules, limits, contribution and retirement planning
Lawrence Blau & Associates, LLC Accountant Westchester NY

401(K) Plan


​​These are employee sponsored defined contribution retirement plans and are very popular. The key elements are:

  • A participating employee has the option of receiving compensation in cash or having it contributed pre-tax to the plan.
  • An employee’s contribution is subject to an annual limit. For 2016, that annual limit is $18,000. This annual limit is for all 401(k) plans for the year.
  • An individual who will be 50 years of age by the end of a tax year may make additional “catch-up” contributions. The maximum catch-up contribution for 2016 is $6,000. Catch-up contributions may only be made if the plan permits this type of contribution.
  • Matching contributions made to a 401(k) plan by the employer are not treated as an employee’s elective and not subject to the annual limit.​