2009 401k Contribution Limits

You knew it was coming.  The contribution limits for your 401k have increased for 2009.  For many this doesn’t mean much, because who wants to put more money in their 401k right now, right?  I’m sure many have perceived the 401k as one of the biggest money traps for 2008.  But for those that see this as an excellent buying opportunity in the market, the increased 401k contribution limit for 2009 might be at just the right time.  With S&P 500 closing down -38% for the year, all contributions in 2009 could potentially be investing near the bottom of the market (at least we hope).

If this article was helpful, you may also want to check out these posts as well: 7 Things To Know About The 2010 Roth IRA Conversion,7 Things You Need to Know About the Roth IRA for 2009,7 Questions To Ask Your Financial Planner.

New 401k Contribution Limits for 2009

The 401k contribution limits jump up to $16,500 for 2009. That’s a $1000 jump from the $15,500 limit in 2008 (6.5% for all you percentage people out there).  If you are financially able, being able to sock away $16,500 pretax is sure fire way to get on the fast track to a successful retirement.  If you are younger, you could also consider the Roth 401k for some serious tax free earnings at retirement.  But what about the late starters?

Catch up Contribution Limits for 2009 Increased Too

For those that got a late start saving for their retirement, the 2009 401k contribution limits have increased the “catch up” provision as well.  For those over the age of 50, you are allowed the $16,500 plus a “catch up” of $5,500 for a total contribution of $22,000.  For all the procrastinators out there, this gives them an excellent opportunity togrow their retirement nest egg to a respectable level.

Recap of Changes:

  • 2009 401k Contribution Limit: $16,500
  • 2009 Catch-Up Contribution Limit (if you are age 50 years old and older): $5,500

How Do You Change Your Contribution Amounts?

For those that are already maxing out your 401k contributions, you may want to double check with your benefits department to ensure that it continues.  You may have to manually increase it to make sure that it happens.  If that’s your plan, go ahead and change it immediately to make sure that don’t put it off too long into the new year.

There are no doubts the rules for qualified retirement plans such as 401k plans are complex. Your plan administrator should have documentation outlining the rules that apply to your particular employer’s plan.  That document should explain these limitations as well as other rules or regulations that might apply.

Other reads on 2009 contribution limits:


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