The Internal Revenue Service today announced cost-of-living adjustments for pension plans and other items for tax year 2010. Each year in October these limits are adjusted according to a formula based on the inflation rate in the third quarter vs. the previous year's quarter.
Section 415 of the Internal Revenue code provides for annual dollar limitation adjustments on benefits and contributions under qualified retirement plans. For 2010 these limits will remain unchanged. .jpg)
The maximum amount an employee can contribute to a 401(k) in 2010 will remain at $16,500 and for individuals over the age of 50, their catch-up contribution will remain unchanged at $5,500. According to a recent Financial Engines survey of more than 550,000 401(k) accounts, very few Americans are actually saving the maximum allowable per year. Only 7% of workers with a 401(k) plan came within $500 of contributing the maximum allowed by the IRS or their plan limit. Information from the Employee Benefits Research Institute’s October 2001 reserach shows that on average retirement participants contribute 6.8% percent of their salaries on a pre-tax basis.
To review all of the applicable changes for compensation amounts, adjusted gross income limits and other deductible amounts for 2010 click here or visit the following site to view the news release from the IRS. http://www.irs.gov/newsroom/article/0,,id=214321,00.html
Comments