Like all other retirement plan, 401k contributions are subject to the maximum 401k contribution limit as set by the Internal Revenue Code Section 401(k) and the terms of each 401k retirement plan. The maximum 401k contribution amount can change from year to year.
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There are two types of 401k contribution limit. The first 401k contribution limit is set by the IRS and specified in the Internal Revenue Code (IRC) section 401k. The second 401k contribution limit is set by each 401k retirement plan. The 401k contribution limit set by the employer is a percentage of the employee's income whereas the IRS' 401k contribution limit is an absolute amount which is quite high.
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