401(k) Deferrals
To begin participating in your 401(k) plan, you should contact your employer and request an enrollment packet. If you have enrolled previously, you may be able to resume contributions by completing the 401 Plan Amount of Contribution Change Form and submitting the completed form to your employer, but you should confirm this with your employer prior to submitting any paperwork. For additional assistance, please contact ICMA-RCs Investor Services at 1-800-669-7400.
Your 401(k) plan may include employer contributions in addition to the contributions you make to the plan. You should check with your employer to confirm whether they make matching contributions based on the contributions that you make. Taking full advantage of matching employer contributions is an excellent way to accumulate retirement savings.
Contribution Limits
The maximum amount that may be contributed annually to your 401(k) plan is set by the IRS each year. Participants who reach the age of 50 or older during the year are eligible to contribute an additional amount above the regular maximum. The current contribution limits are shown below.
| Year | Maximum Employee Contribution | Age 50 Catch-Up Contribution | Maximum Employer and Employee Contribution Combined |
|---|---|---|---|
| 2009 | $16,500 | $5,500 ($22,000 total) | $49,000 |
| 2010 | $16,500 | $5,500 ($22,000 total) | $49,000 |
Roth 401(k) Deferrals:
If your 401(k) plan permits Roth deferrals, the maximum employee contribution amount includes the combination of both Roth and regular (non-Roth) deferrals to the plan.
Note to Participants in a 401(k) Plan and a 457 Plan:
If your employer also offers a 457 plan, you may be eligible to contribute the maximum to both plans. Contributions to a 401(k) plan do not reduce the amount you are eligible to contribute to a 457 plan.
Vesting
Vesting is the process by which you become entitled to employer contributions to your retirement plan. The amount of time required to become fully vested varies by employer, and you should check with your employer to determine the vesting schedule for your plan. The vesting schedule determines when you acquire "ownership" of the employer contributions (and associated earnings) in your plan. When you separate from service, the vesting schedule will determine how much of your account is "owned" by you and may be paid to you.
You are always 100% vested in the contributions you make to your 401(k) plan (i.e., if you separate from service with your employer, you are entitled to 100% of the balance resulting from your own contributions to the plan).
Investment Earnings
All investment earnings in your 401(k) Plan account accrue on a tax-deferred basis. You will not pay income tax on pre-tax contributions or earnings until you take a distribution from your account.
Earnings on Roth 401(k) contributions may be withdrawn completely tax-free if certain criteria are met. Review our Roth 401(k) page for additional information.