Final answer:
The maximum annual, tax-deferred contribution limit to a 401(k) plan is determined by the IRS and may change annually. It is essential to consult the latest IRS guidelines or a financial advisor for the current year's limit.
Step-by-step explanation:
The maximum annual, tax-deferred contribution that employees may make to a 401(k) plan varies depending on the tax year and any updates to the contribution limits set by the Internal Revenue Service (IRS).
These plans are designed as a way for individuals to save for retirement via funds that are tax deferred, meaning that the contributions and the growth of the investment are not taxed until they are withdrawn during retirement.
It is important to keep in mind that these limits can change year to year due to tax law changes or cost-of-living adjustments. Employer contributions to a plan such as a 401(k) or a 403(b) do not count towards these limits; only the employee's elective deferrals are capped.
Since the limits can change annually, it is always recommended to check the current year's contribution limit on the IRS website or by consulting with a tax or financial advisor.