401k Contribution Limits

401K contribution limit is the amount set by the IRS each year for contributors to pay in accordance to their 401K plan. This is also the ceiling or maximum amount that the contributor should pay. Any excess in payment is subject to penalties and fees, so it is best to stick with the limit each year. A contributor is usually an employed individual whose age is below the retirement age, or below 50 years old. Each year, the 401K contribution limit changes, depending on the overall status of the economy and cost of living allowance index, and based on the policies set by the IRS.