Back in February when the President made his State of the Union address, one item he discussed was limiting the size of people's 401k's. One example he cited was the massive size of Mitt Romney's 401k. If I read some of the sentiment after the speech correctly, some people called it government overreach and limiting 401k's to $3.1 million would hinder people's retirement. Although I don't have a crystal ball, I wanted to see how "damaging" this would be. The following were my assumptions I made: 1) Theoretical person starting at age 22 2) Starting salary of $50,000 3) Managed to put away the maximum contribution of $17,500 in first year (2014) 4) Company/group match is 0.045 of salary; takes full advantage 5) Increase contribution by 1% per year; assumes each year the government allows 1% more to be added 6) Invests in S&P 500 or Vanguard Total Market Index; reinvests dividends 7) Dividends paid at 2.5% on average every year 8) Investment growth is 7% per year (a pretty fair average growth rate for both) Using this approach, the resulting age that the person's 401k balance will equal $3.1 million is between age 50 and 51 (the catch up contribution has not even come into effect). Okay, so this could cap a person's retirement account but stay with me as a make one last assumption and calculation. Much like the maximum 401k contribution which is increased each year, lets assume the same application to the $3.1 million dollar cap is applied. Lets assume the government allows the 401k max to increase by 2.5% per year. By age 51, the government maximum will be $6-6.2 million. Though if we chose a governmental increase of 1%, by age 51, the 401k max value will be $4-4.1 million. In both cases, the government would not constrain a person's retirement growth. However, if we continued it out to age 55, in both scenarios the "person's" 401k balance would exceed the government's allowable max before age 60 without the catch up contribution. My conclusion is some of the ire may be deserved if Obama can implement the 401k max. However, this all depends on the implementation and future results. If the $3.1 million is a hard and fast rule, the person above will be forced stop contributing to their 401k before they even reach the catch up contribution age. Likewise, if it's implemented and adjusted over time, it may not effect the "person" at all and they could continue to contribute up to age 60. I also tinkered with the initial contribution. I assumed the newly employed was only able to contribute $8,750 (half the max but still able to take the 4.5% match) and never took advantage of the catch up contribution. They would break the $3.1 million mark by age 56, exceed the 1% government increase by age 60, and overtake the 2.5% government increase by age 67 (assuming they continued to work). A win for compound interest!