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Investment Planning |
401(k) Contribution Limits
If you have a 401(k), 403(b), or 457 plan, you can contribute $16,500 in 2010. If you're at least age 50 by December 31 this year, you can make an additional $5,500 contribution.
The current annual employee contribution to a SIMPLE employer retirement plan is $10,000 in 2010, and will likely be indexed after that. Taxpayers over age 50 are eligible to make a catch-up contribution of $2,500.
| Year | SIMPLE plans | Contribution, over age 50 |
| 2004 | 9,000 | 10,500 |
| 2005 | 10,000 | 12,000 |
| 2006 - 2010 | 10,000 indexed | 12,500 |
A Roth 401(k) or 403(b) plan is available too. After-tax dollars fund these accounts, and upon withdrawal in retirement, the original contribution plus earnings is tax-free.
Self-employed individuals can contribute up to $49,000 to a qualified retirement plan in 2010. If you are in a two-income household with plenty of excess cash flow, consider having the self-employed spouse maximize her annual contribution.
Tips Disclaimer
These tips contain information that may change over time as a result of new tax legislation. Although we make efforts to keep this information current, you should check with your tax advisor before taking action based upon any information contained in these tips.