• How much can you contribute per year?

• How much money should you contribute to your 401k?

• What if you want to contribute more than $10,000 a year?

• What if you had two different jobs and contributed more than $10,000 for one year?

How much can you contribute per year?

Each year, the Internal Revenue Service sets a maximum contribution limit for 401(k) accounts. For the 1999 tax year, the maximum pre-tax contribution you can make to all 401(k) plans is $10,000. For the year 2000, the maximum increases to $10,500.

If possible, try to invest in your 401(k) to the maximum. As a tax-deferred vehicle, it allows your investment to compound quickly. Federal law also allows you to contribute substantially more than to an IRA.
When employers match your contributions, the extra money automatically guarantees you a good return. Only if your investment choices are limited should you commit less than the maximum to the plan. Put in enough money to get the full company match if you can invest only in company stock, for example, and then diversify with an IRA.
Your 401(k) is a long-term investment, and you should choose among the funds in the plan accordingly. Many park their money in bonds, money markets, or other conservative investments. Over the long haul, the gains from these plans are likely to be dwarfed by earnings in stock funds. Stocks are riskier in the short run but historically have had the best long-term returns.

The $10,000 annual contribution limit set by the IRS only applies to pre-tax contributions. Some plans also allow participants to make after-tax contributions, which aren't included in the government limit. The contribution is taken after-tax and is non-deductible, but the earnings grow tax-deferred until retirement, when they are taxed like ordinary income. Also think about opening a traditional IRA or Roth IRA if you're looking for more retirement investments for your post-tax money.

Oops. You've gone over the $10,000 limit for 401(k) contributions in one year. Contact your employers' benefits departments as soon as possible to correct the error. You must have the excess amount refunded to you before April 15 of the year following the calendar year in which you paid too much. Otherwise, you may have to pay a 10% penalty on the amount, along with federal, state, and local taxes.