HRMan Benefits' Blog


2012 401K Contribution Limits for Aged 50 and Above

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When you’re nearing retirement age, you’d most probably be concerned with your savings. 401k is one of the plans that many hardworking US citizens have enrolled in. If you’re one of them and have already reached the age of 50, you should know the 2012 401k contribution limits set by the government. Keeping these maximum numbers in mind, you can determine how much you can put into your savings.

The total contribution that you can be allowed to make for your plan this year is up to USD 50,000. This, of course, won’t be applicable if you’re receiving less than USD 50,000 for your annual gross compensation. If this is the case, your annual gross compensation will be your total contribution limit for the whole of 2012.

Your total contribution mainly consists of your pre-tax deferrals and your catch-up contributions. Pre-tax deferrals are the basic funding for all 401k plans, regardless of age. These are deducted from your salary before all taxes. But since you’re at least 50 years old, you get the benefit of catch-up contributions, which means you can put in additional retirement savings from your pre-tax salary.

If you’re holding a traditional or safe harbor plan, you can be permitted to contribute up to USD 22,500 on all funds from your pre-tax salary. The standard pre-tax deferral limit for these plan types is USD 17,000, while the catch-up contribution limit is USD 5,500. If you’ve got a SIMPLE plan, it’s possible for you to put in up to USD 14,000 from your salary before taxes. This can be broken down into USD 11,500 for the standard deferrals and USD 2,500 for catch-up.

Generally, you can also add to your 401k savings a portion of your post-tax salary. This is on the condition that the sum of your pre-tax and post-tax funds still won’t go beyond the 2012 401k contribution maximum of USD 50,000 or 100 percent of your annual gross compensation – whichever is the lesser amount.

You might also be one of those fortunate ones whose employers have decided to match their employees’ pre-tax deferrals with more retirement funds according to a certain ratio. One of the most popular employer match ratio is 50 cents to a dollar. This means that the employer gives 50 cents more to the employee’s 401k savings for every dollar in that employee’s pre-tax deferrals.

It’s never too late to understand your retirement plan better. Check with your employer or your plan advisor all the details on how to maximize the savings potential of your plan, especially when you’re nearing your retirement age.

Knowing more about 401k contribution limits 2012 will help you know how to save more for your retirement. Visit for more information also about the benefits of your plan.

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Author: hrmanbenefits

Anderson Thornton Consultants is a full-service insurance brokerage and employee benefits management firm based in Tampa, Florida, servicing businesses all over the United States.

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