Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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What is the maximum annual contribution limit for a 401(k) plan?

$14,000
$17,000
$20,000
$22,500

The correct answer is: $17,000

The maximum annual contribution limit for a 401(k) plan is determined by the Internal Revenue Service (IRS) and can change from year to year due to cost-of-living adjustments. As of 2023, the limit for employee contributions to a 401(k) plan is set at $22,500. This limit allows individuals to save for retirement while taking advantage of tax benefits. Individuals who are 50 years of age or older can also benefit from catch-up contributions, which add an additional limit to their contributions for a total of $30,000 in 2023. It's essential to stay updated with the IRS regulations each year, as these limits can impact retirement planning significantly. Understanding the contribution limits helps individuals maximize their retirement savings and ensure they are on track to meet their financial goals.