I would like to ask a specific question regarding employer limitations on 401k contributions. I have read other posts in the forum that explain that limitations often exist on highly compensated employees depending on the contribution level of lower paid employees. I belive this not to be the case in my situation.
I am a graduate student and I am able to live and contribute $5,500 to a Roth IRA each year on my graduate stipend. I also work a part-time teaching job that has a very high hourly wage, but due to the small number of hours brings in only about $1,500 of income per month. The company through whom I do the part-time teaching offers a 401k, but the contribution limit is capped at 25%. They do not provide matching funds to employees. Were I able, I would put almost all of the income from this job in the 401k.
Is the employer within their right to restrict the contribution to 25%?