Annual Addition

The maximum dollar amount that may be contributed to a participant's retirement account under a defined-contribution plan.

For instance, the maximum annual addition for a participant under a defined-contribution plan for any tax year is 100% of the individual's eligible compensation or a certain dollar limit, whichever is less. For 2005, the dollar limit is $42,000, but every new tax year this may be indexed for inflation by a $1,000 increment.


Investment dictionary. . 2012.

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