Q&A: Max contributions to 401(k)s

Dear Liz: I understand that anybody with a 401(k) can contribute up to $18,000. Does the amount you can contribute depend on your salary? Say you make $45,000. Therefore I would assume you could put in the full $18,000, or 40% of your salary. Am I wrong?

Answer: The maximum the IRS allows someone under 50 to contribute to a 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $18,000 in 2015. The additional “catch up” contribution limit for people 50 and older is $6,000.

The plans themselves, though, may impose lower limits. Even if the plan doesn’t cap contributions, your contributions may be limited if you’re considered a “highly compensated employee.” Last year, highly compensated employees were those who earned more than $115,000 or owned more than 5% of the business. If lower-earning employees don’t contribute enough to the plan, higher earners may not be able to put in as much as they’d like.

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