401(k) Plans

A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts.

  • Elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals).
  • Employers can contribute to employees’ accounts.
  • Distributions, including earnings, are includible in taxable income at retirement (except for qualified distributions of designated Roth accounts).

*Note: it is important to contact your plan administrator for complete details on your 401(k) plan.

*Note: www.irs.gov website was used to provide this information to you.


Pre-tax contributions


Grow tax-deferred until distributions are made from the plan


Most retirement plan distributions are subject to income tax and may be subject to an additional 10% tax.

Generally, the amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ are called ”early” or  ”premature” distributions. Individuals must pay an additional 10% early withdrawal tax and report the amount to the IRS for any early distributions, unless an exception applies.

*Note: Contact your plan administrator for the proper information on hardship distributions and loans.

Note: You should always consult an accountant if you choose to withdrawal funds from a retirement account


*Note: Contact your plan administrator

Maximum Contribution:

Two annual limits apply to contributions:

  • A limit on employee elective deferrals; and
  • An overall limit on contributions to a participant’s plan account (including the total of all employer contributions, employee elective deferrals, and any forfeiture allocations).

Deferral limits for 401(k) plans 

The limit on employee elective deferrals (for traditional and safe harbor plans) is:

$18,000 in 2015 - 2017

Plan-based restrictions on elective deferrals: *Note: Contact your plan administrator

Catch-up contributions for those ages 50 and over

If permitted by the 401(k) plan, participants who are age 50 or over at the end of the calendar year can also make catch-up contributions. The additional elective deferrals you may contribute is:

  • $6,000 in 2015 - 2017 to traditional and safe harbor 401(k) plans
  • $3,000 in 2015 - 2017 to SIMPLE 401(k) plans

Overall limit on contributions

Total annual contributions (annual additions) to all your accounts in plans maintained by one employer (and any related employer) are limited. The limit applies to the total of:

  • elective deferrals
  • employer matching contributions
  • employer nonelective contributions
  • allocations of forfeitures

The annual additions paid to a participant’s account cannot exceed the lesser of:

  1. 100% of the participant's compensation or
  2. $54,000 ($60,000 including catch-up contributions) for 2017; $53,000 ($59,000 including catch-up contributions) for 2016

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