About to contribute a pension plan? If you’re in the private sector, then pension plans are funded by your employer. They will contribute a pool of funds set aside for a worker’s future benefit. These funds are invested on your behalf in order to generate a consistent income when you retire.

How Much are You Allowed to Contribute a Pension Plan?

If you work in the public sector, you can receive a government employee pension plan that’s often footed by taxpayers. It’s often a complement to Social Security and personal investment. In fact, you have the option to contribute a portion of each paycheck to your preferred retirement system.

Moreover, some pension plans come with a voluntary investment component. If you have such a pension plan, you could contribute part of your current income from wages into a retirement investment plan.

Your employer can also match a portion of your annual contributions. This is usually up to a specific percentage or dollar amount.

Contribution and Benefit Limits

For 2020, here is a list of retirement plan contributions and benefit limits. Make sure to check these figures annually. Usually, the figure can be counted on to increase by $500 each year.