This year, the IRS raised the limit on annual compensationdeferrals to 401(k) plans a bit, from a $17,500 cap to $18,000.Pre-retirees, those age 50 and over, have the benefit of an extra$6,000, the so-called catch-up deferral.
Younger executives and higher-compensated employees likely aregoing to need that catch-up allowance one day if they plan toreplace 85 percent of their income in retirement, a rate oftenrecommended by retirement advocates.
The quick math shows that a higher-compensated employee earning$225,000 who contributes the limit of $18,000 to a qualified 401(k)plan would be deferring 8 percent of his or her income.
Continue Reading for Free
Register and gain access to:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
