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Taking a 401(K) account to the max

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Q Now that my youngest child has graduated from college, I’m looking to max out on my 401(k) account. Does the limit for 2007 include matching contributions? T.G.L., Ann Arbor, Mich.

A One limit does, but probably not the one you’re thinking of. For 2007, you can elect to defer up to $15,500 of salary to a 401(k) plan (plus $5,000 if you’re age 50 or over). This does not include any matching contributions by your employer. Thus, if your employer matches dollar-fordollar, you can salt away up to $31,000 (or $41,000) for 2007. But the IRS also limits the amount that can be contributed from all sources, including matching contributions. For 2007, it’s the lesser of 100 percent of compensation or $45,000.

Tip: Be aware that matching contributions cannot favor highly compensated employees.

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