IRS Increases the Amount you can Save in a Qualified Account for 2009

IRS Increases the Amount you can Save in a Qualified Account for 2009

I was on the IRS’ website today for a different research project (something associated with 403(b)s and the final reguations which become effective Jan 1, 2009 – if there is any interest in this info let me know and I”ll do a post) and I came along some great useful information for almost everyone.

  • The amount one can put into a 401(k) increases from $15,500 to $16,500.
  • The amount one can put into a 457 increases from $15,500 to $16,500.
  • Catch up provisions increase from $5,000 to $5,500 (you can put this amount more if you are older than 50).
  • Deductions associated with IRAs are as follows:
    • Single Tax Payers – phase out increases from $53K to $63K to $55K – $65K (this means you only get your tax deduction if you are less than the top phase out income).
    • Married Tax Payers filing jointly – phase out increases from $85K to $105K to $89K – $109K (this means you only get your tax deduction if you are less than the top phase out income).
  • Who can participate in a Roth IRA:
    • Single Tax Payers – Phase out increases from $101K – $116K to $105K – $120K (basically how much, if any that you can put into a Roth IRA).
    • Married Tax Payers filing jointly – Phase out increases from $159K – $169K to $166K – $176K (basically how much, if any that you can put into a Roth IRA).
    • Remember, according to current tax law there is no MAGI (Modified Adjusted Gross Income) limits in 2010.

Why are these numbers important? Well if you are above the latter income levels you may not want to invest in those retirement accounts.  Additionally, lets say you are one of those smart people who chop up their 401(k) contributions to even them out throughout the year, well you will have to increase your amount.  For example in 2008 it was $15,500/52 weeks – $298ish/week….in 2009 it is $16,500/52 – $317ish/week.

Other qualified plans saw increases but, they aren’t applicable to most people, so if you don’t see yours in the list (i.e. SEPs/Simples) check here and here, or just ask me and I’ll do the research for you!

As usual nothing here should be construted as tax, legal or financial advice see the disclaimer for full CYA language.

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