Your employer’s specific 401(k) plan will allow you to contribute up to a certain percentage of your before-tax pay; tax law limits the maximum you may contribute each year. If you are age 50 or older, you may make catch-up contributions. That is, you are allowed to contribute extra amounts over and above your before-tax contribution limit.

In 2008, the maximum dollar amount the law allows an employee to contribute from before-tax pay is $15,500, and the catch-up contribution limit is $5,000. In years after 2008, the contribution limit may be increased to adjust for inflation.