What are 415 limits?
Well, we’ve already found that there is a limit on how much an employee can contribute to a 401k or 403b plan, which is $17,000 in 2012 (402g Limit). But, there is also a limit on how much can be contributed to one of these plans by both the employee and employer together. This is called the 415c limit, or limit on Annual additions. This limit is $50,000 in 2012.
This means that the combination of employee deferrals, employer match, and profit sharing contributions cannot exceed a total of $50,000 for 2012. Again, 415c gets its name from the section 415(c) of the Internal Revenue Code where the rules appear.
Let’s say you meet the 401k contribution limit of $17,000 and you also received matching contributions of $5,000, the total now contributed to the account is $20,500. This means that any other contributions that are made to the account, including profit sharing contributions, cannot exceed $29,500 (this sounds like a lot, but you’d be surprised how many employers give profit sharing contributions this size).
If your age is 50 or more, you may still contribute $5,500 in addition to the 415C contribution limit of $50,000. In such cases, your total limit from all sources can be $55,500.
That’s really all there is to it!