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I am 29 years old and have a 401(k) already with my company. I just started contributing 10% to my 401(k), up from my 8%. My company does not match but they do put 10% of my salary into my 401(k) as their contribution every February, once per year. I make between 95k and 110k a year and as stated started to put 10% of my pay into my 401(k). My current 401(k) balance is at $53k-ish.

My question is: When do I max out in the year 2012? I read at $17,000, but does that cover only my contributions, or both mine and my employer's? If I do max out with mine and my employer's, how do I know that, and how will I be notified? If I do max out, what do I do with the extra funds beyond the max? Should I put that into a Roth IRA? I am concerned as I get paid more year after year when I will be maxed out. What penalties or options do I have?

Thanks in advanced for the information and I look forward to reading more on this forum!

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    I suggest you take a close look at the fees in the 401(k). Much above .5%/yr and I'd suggest using an IRA for $5000 of your intended retirement savings. – JTP - Apologise to Monica Jan 3 '12 at 17:04
  • Im with @JoeTaxpayer... I would even go so far as to put just the minimum required for your company into the 401k and go with an IRA for the rest. – user4127 Jan 3 '12 at 18:20
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The maximum amount you can contribute in 2012 is found in the IRS 401(k) Resource Guide. That amount ($17,000 for those under age 50) is your contribution. There are additional limits on the matching amount that your company can deposit. from the same document listed above "may not exceed the lesser of 100% of your compensation or $49,000 for 2011 and $50,000 for 2012"

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The $17,000 limit (for 2012) is for your contributions only. As for what happens when you reach that limit, it is up to the individual plan. It should be explained in the documents that you received, or your HR department should be able to tell you. Of the four companies I am familiar with, three simply stopped taking money out of my check when I hit the limit. To me, this is the preferable option. The fourth company switched to after-tax contributions to my 401(k). Combined with only allowing deductions in whole percentages of income, it makes it difficult to exactly hit the maximum pre-tax limit without contributing some post-tax as well.

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