FINANCIAL JOURNEY
By Frank A. Sciecinski
Associate Vice President
Raymond James
Bellevue Park Corporate Center
200 Bellevue Parkway
Suite 425
Wilmington, DE 19809
1-800-225-8043
Frank.Sciecinski@RaymondJames.comFinancial and Retirement Planning for Life
Plan Limits Up, But Not IRAsAfter a year in which many thought the cost of living increased noticeably – and because of which the Social Security Administration announced a 5.8% cost-of-living adjustment in basic benefits beginning in January 2009 – the new retirement ceilings allowed by the Internal Revenue Service (IRS) disappointed individuals even as they cheered those covered by 401(k) and other qualified retirement savings plan.
IRA Limits Unchanged
It took a second notice from the IRS (Notice 2008-102) to make it clear that the 2008 traditional and Roth IRA limits - $5,000 (plus an additional $1,000 catch-up contribution if you are aged 50 or over) – remain the same in 2009. Current legislation dictates that new limits are to be indexed to inflation in $500 increments, and analysts soon figured out that even a relatively high inflation figure was not enough to reach that level. The $1,000 catch-up provision is not indexed, so it will remain unchanged unless altered by statute.
Plan Ceilings Increased
If you are saving for retirement through company-sponsored retirement plans, you will be able to contribute more in 2009, however.
The new maximums for pre-tax contributions to 401(k) and 403(b) plans jumped $1,000 to $16,550 for 2009. The catch-up limit for those 50 or over also increased, from $5,000 to $5,500. A 401(k) plan participant 50 or over in 2009 will be able to contribute a total of $22,000.
The limit of a SIMPLE IRA contribution for 2009 is raised to $11,500 from $10,500 in 2009. The SIMPLE catch-up limit for 2009 is $2,500.
THE 2009 RETIREMENT PLAN LIMITS
IRA – Traditional or Roth $5,000 Catch-Up for Those 50 or Older $1,000 401(k), 403(b) Elective Deferral Limit $16,500 401(k), 403(b) Catch-Up for Those 50 or Older $5,000 Defined Contribution Plan Annual Dollar Limit $49,000 (Maximum that may be contributed) Defined Benefit Plan Annual Dollar Limit $195,000 (Maximum payable to participant) SIMPLE IRA Employee Contribution Limit $11,500 SIMPLE IRA Catch-Up for Those 50 or Older $2,500 Highly Compensated Employee Compensation Limit $110,000 Annual Compensation Limit $245,000 (Maximum compensation to be taken into account to determine contributions and deductions) SEP Minimum Annual Compensation Limit $500 (Minimum to participate in simplified employee pension (SEP) plan)
