To determine the amount to contribute to this plan, consider the following questions:
What specific percentage do I want contributed each payroll?
Using a percentage means the dollar amount will increase when your pay increases, and decrease when your pay decreases. When considering a percentage, you still need to leave sufficient earnings for other deductions such as health, parking, etc.
Do I want to defer the maximum allowed under the annual limit? If yes, do I want the contributions spread evenly throughout the year, or made as quickly as possible until the annual limit is reached?
To spread evenly throughout the year, you should divide the annual amount by the number of remaining payrolls in the calendar year, which will give you the dollar amount. Then divide that by your biweekly gross to determine the percentage of pay that will accomplish this.
To make contributions as quickly as possible, choose the highest percentage of pay you can afford, leaving enough to cover all payroll taxes and other payroll deductions for employee benefits, parking, etc. Contributions will automatically stop when the annual limit is reached. The annual limit is based upon your age as discussed in the section on Annual Limits.
Contact your campus benefits office for more information.