[gajab]

Few Qs?

1. Is employer contribution counted for maximum allowed contribution in 401K?
Example: During year 2010 employee contribution was $16000 and employer did $8000 as matching contribution. In this case does the employee (tax payer) has crossed the maximum limit of 401k i.e. $16500 or not?

2. Is maximum tax deductible contribution in IRA depends on contribution in 401K?
Example: During year 2010 Mr. X (45 yrs) earned $85000 and contributed $14000 towards 401K (No employee matching contribution). Mr. X is married (spouse not working) and filing jointly. Can Mr. X contribute maximum tax deductible i.e $5000 in IRA? Further, Can Mr. X contribute another $5000 in IRA against spouse IRA?

Thanks

Can Mr. X contribute $5000

[ebaines]

1. No - employer match does not count against the maximum annual contribution employees are allowed to make to their 401(k) plan. Each employee under age 50 can contribute up to $16.5K in 2011, independent of what the company contributes.

2. The maximum annual limit on an IRA is independent of whether you contribute to a 401(k) plan at work or not. So you can contribute $16.5K to the 401(k) plan at work and another $5K to your IRA, and also $5K to a spousal IRA as well.

[gajab]

Thank you