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Despite some concerns that the retirement contribution limits would be reduced in 2010, the IRS announced that the maximum contribution limits for your 401(k) and other retirement plans will remain unchanged in 2010. The limits will remain at the 2009 levels.
These limits are set each year based on a cost of living adjustment. The maximum contribution is based on a formula using the third quarter CPI-U (Consumer Price Index for all urban consumers). This index declined 1.3 percent over the last year leading to the fear of a decline in the contribution limits.
The IRS noted, however, under the Social Security Act, the limits could not be reduced.
All retirement contribution limits for 2010 will remain unchanged from 2009 levels. For example:
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Savings Incentive Match Plan for Employees (SIMPLE): Contribution limit $11,500 with a $2,500 catch up clause for age 50 and older.
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Individuals Limits for 401(k): Annual compensation limit $245,000; maximum annual contribution $16,500 with a $5,000 contributions for age 50 and older.
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Individual Retirement Plans (IRAs): Maximum contribution $5,000 with a $1,000 catch up for age 50 and older.
Other 2010 Changes
Further, several other deductions will remain unchanged in 2010. Personal exemption will remain at $3,650. Standard deduction will remain the same for married couple filing jointly at $11,400 and married filing separately $5,700. The standard deduction for head of household is $8,400 for 2010, up from $8,350 in 2009. Annual gift exclusion remains at $13,000. |
