Annual Addition
The maximum dollar amount that may be contributed to a participant's retirement account under a defined-contribution plan.
Investopedia Commentary
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.
Related Links
New Retirement Plan Limits For 2005
The 401(k) and Qualified Plans Tutorial
See also: 401(k), Defined-Benefit Plan, Defined-Contribution Plan, Elective-Deferral Contribution, Matching Contribution, Profit-Sharing Plan, Qualified Retirement Plan