The IRS has maximum contribution limits that allow individuals and employers to contribute to a 401(k) plan. The limits to these contributions are listed below:

401(k) Contribution Limits for 2008
Salary Elective Deferral Limit: $15,500
Simple Maximum Contribution: $10,500
Maximum Employer and Employee Defined Contribution Plan Limit: $46,000
Catch-Up Contribution Limit For Age 50 or more: $5,000

401(k) Contribution Limits for 2009
Salary Elective Deferral Limit: $16,500
Simple Maximum Contribution $11,500
Maximum Employer and Employee Defined Contribution Plan Limit: $49,000
Catch-Up Contribution Limit For Age 50 or more: $5,500

Source: www.irs.gov/retirement/article/0,,id=96461,00.html

Furthermore, for those who are looking just to make regular contributions to their 401(k), the following applies:

 

Traditional and Roth IRA's (2008):  $5,000 workers age up to 50, $6,000 workers 50 and older

Traditional and Roth IRA's after 2008:  Maximum contributions are adjusted for inflation in $500 increments.

 

Source: http://www.bankrate.com/brm/green/retirement/401k_contributions.asp?caret=4e

 

The biggest advantages to any IRA tends to be how they work with tax. Funds in all 401(k)'s grow tax deferred. Roth IRA's also have the added benefit of allowing investments to be earned with pre-tax dollars.

 

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