401(k) Contribution Limit Raised by IRS

The Internal Revenue Service has increased the amount of money U.S. taxpayers can deposit into their 401(k) plans every year. In 1998, individuals will be able to place up to $10,000 into 401(k) accounts, up from the current level of $9,500. The IRS adjusts the contribution caps every year to account for inflation. A 401(k) plan is a retirement fund that is invested in stocks, bonds or money markets. Companies often match a portion of the employees’ contributions, although the combined contribution can’t exceed 25% of an employee’s gross pay in 1998.