The annual contribution limit for 2016 is $18,000.00, which is unfortunately the same as it was for 2015. This is the amount employees who participate in 401(k), 403(b), and most 457 plans can contribute. Federal government employees who contribute to the Thrift Savings Plan (TSP) can contribute this amount as well.
It seems the Treasury Department’s increases are set on a 2 year plan. We saw an increase last year (2015) of $500.00 to the $18,000.00. 2013 and 2014 were in the amount of $17,500.00. So if the trend continues, maybe next year we will have another increase in limits.
Catch Up Contribution
If you’re 50 or older you can add an additional $6,000.00 called the catch up contribution. The 401 (k) catch up contribution is limited to $6,000.00 for 2016. So that means if you are 50 or older you can put back a total of $24,000 as employee deferrals into a 401(k). This goes for anyone who turns 50 during the year. So if you turn 50 on December 31, 2016, then you have the right to the $24,000.00.
You may not be able to contribute anywhere close to the 2016 limit of $18,000.00 or $24,000.00 limit if you are 50 or older, but any amount you can stash back for the future no matter how small will be beneficial to your retirement years. If you are struggling to pay credit cards, medical bills or personal loans, not to mention your mortgage and vehicle loans, and thus have no money to save for your future, please call one of our conveniently located offices to set up a private consultation with one of our experienced attorneys.
We will analyze your situation and help you make the best decision possible to help you navigate your financial problems.
Grant McNutt is a Managing Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Science from the University of Alabama, and a Juris Doctorate from the Birmingham School of Law. He has been practicing Consumer Bankruptcy Law since 1999.Read his full bio here.