2018 401k Facts:
- Contribution limit for ages 49 and under: $18,500
- Contribution limit for ages 50 and older: $24,500
- This includes the $6,000 catch-up contribution
- This applies to anyone who turns age 50 in 2018, even if you turn age 50 on 12/31/2018
- Total contribution limit: $55,000 ($61,000 for age 50 and older)
- This is the total limit when adding the employee's contribution and the employer's matching contributions
- Annual compensation limit is $275,000
- This means that only the first $275,000 of an individuals income can be used when calculating matching contributions
- 401k contributions are tax-deferred
- This means you don't pay taxes on the money you contribute to your 401k until you start withdrawing in retirement
- Penalty-free withdrawals start at age 59 1/2
- Some plans might be age 55 (check with your plan administrator)
- Some plans don't allow withdrawals from the plan of the company you're currently working for even at age 59 and 1/2 (check with your plan administrator)
- Required minimum distributions start at age 70 1/2
- Generally speaking the IRS starts forcing you to take money out but check with your plan administrator if you're still working