Higher Retirement Plan Contributions for 2009

The IRS has announced cost-of-living adjustments to various limits for qualified retirement plans in 2009. There is a potential for greater contributions. Some key numbers to watch:

• For 401(k) plans, elective deferrals by participants can be up to $16,500 (up from $15,500 in 2008). Those who are 50 or older by the end of the year can add another $5,500 (up from $5,000 in 2008), for a total elective deferral contribution of up to $22,000. The limit for SIMPLE plans (savings investment match plans for employees of small employers) is $11,500 (up from $10,500 in 2008); the additional contribution by those age 50 or older by year-end remains at $2,500.
• For simplified employee pension plans (SEPs) and profit-sharing plans, the limitation in 2009 is $49,000 (up from $46,000 in 2008).
• For defined benefit (pension) plans, the maximum benefit taken into account in 2009 is $195,000 (up from $185,000 in 2008).
• In figuring contributions and benefits to qualified retirement plans, the maximum compensation taken into account in 2009 is $245,000 (up from $230,000 in 2008).
• For the retirement saver’s credit, which can be claimed by eligible taxpayers making contributions to IRAs, 401(k)s, and similar plans, the adjusted gross income limits have been increased-this allows more taxpayers to qualify for the credit.

Source: www.irs.gov/newsroom/article/0,,id=187833,00.html