2011 IRS Maximum Allowed 401k Contribution Announced

Update: the 2012, 2013, 2014, 2015, and 2016 401K maximum contribution amounts have now been released since this post was written. What follows is for 2011.

This past week, the IRS 2011 401K maximum announcement finally came.

The Maximum 401K Contribution in 2011 will be…

Identical to 2009 and 2010. Bummer, dude.

That’s right, the IRS 2011 maximum 401K contribution limit will stay the same as the 2009 and 2010 401K maximum contribution at $16,500 ( 2012, 2013 did see increases). This also goes for 403B and 457B plans. The maximum 401K catch-up contribution per year for those over 50 years old will stay the same at an additional $5,500 over the standard contribution. For reference, the last increase was when 2009’s 401K maximum had increased $1,000 over 2008’s $15,500 maximum. I have to admit, I’m very disappointed to hear this news.

The Sad Part of 401K Maximum Contributions Staying the Same

401k maximumThis news is disappointing when you take into consideration the fact that the maximum contribution level has increased in all but six years going back to it’s beginning in 1987 (almost 3/4 of the time). Now we’ve gone three years without an increase (for the first time in history). It’s also worth noting that in that time period the maximum 401K contribution amount has never declined.

The Ironic Part of 401K Maximum Contributions Staying the Same

Last year, there had been rumblings that the maximum 401K contribution level might actually decrease in 2010 for the first time due to the Consumer Price Index (CPI) decreasing year over year. Thank goodness, it didn’t

But what is ironic about this IRS decision is that the federal government has a very determined effort to keep mortgage rates artificially low right now and has started to use other quantitative easing tactics to increase inflation. At the same time, the value of the dollar has plummeted. Food and gas prices have skyrocketed. Yet no 401K increase? Of course not, the fed wants us to spend that money to stimulate the economy!

Looking to Diversify Beyond your 401K?

Mad that the 401K max limit didn’t increase? Start up a Roth or Traditional IRA. I moved my traditional and Roth IRA to TradeKing, who has zero maintenance fees and trades are only $4.95. You’ll probably be saving money on fees versus your 401K.

401k Discussion:

  • Are you excited, disappointed, or indifferent to this 401K news?
  • Do you plan on maxing out your 401K in 2010 or 2011?
  • Have you ever maxed out your 401K?

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