Retirement Plan Contribution Limits for 2010

It’s time to adjust our retirement plan contributions for 2010. These plans include 401(k) plans, individual and spousal IRAs, and our Health Savings Account, which we use for retirement savings.

Here is the 2010 contribution limit data, courtesy of the IRS:

2010 401(k)/403(b) Contribution Limits :

After many expressed concern that the 2010 401(k) contribution limits would be decreased, the IRS has announced that they will remain the same as 2009: $16,500 plus a $5,500 catch-up contribution if you are 50 or over, for a total of $22,000.

For all of the exciting details, consult this IRS press release and this IRS 401(k) Resource Guide.

2010 IRA Contribution Limits:

If you are under 50 years of age at the end of 2009, the maximum contribution that you can make to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2009. This limit can be split between a traditional and a Roth IRA but the combined limit is $5,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (modified AGI).

If you are 50 years of age or older before 2010, the maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2009. This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified AGI.

To determine if and how much of your traditional IRA contributions will be deductible in 2010 based on your income and marital status, use this IRS table if you have a retirement plan at work, and this IRS table if you do not. Roth IRA contributions, of course, are not tax deductible.

2010 HSA Contribution Limits:

Health Savings Account (HSA) participants can contribute up to $3,050 for an individual and $6,150 for a family plan. Participants 55 and older can contribute an extra $1,000, or $4,050 for an individual account and $7,150 for a family account.  These contributions are 100% tax deductible from gross income. The limits apply to the combination of employee and employer contributions to the account.

Being able to sock away $7150 annually tax-free, and being able to withdraw it (and earnings) in retirement tax-free is a fantastic deal. I sure hope Obamacare doesn’t change this.

Minimum annual deductibles for HSAs in 2010 are $1,200 for self-only coverage and $2,400 for family coverage.

Annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) cannot exceed $5,950 for individual coverage and $11,900 for family coverage.

Don’t forget that you have until you file your 2009 federal income tax return to complete your 2009 IRA and 401(k) contributions!



Comments

  1. Brian says

    For IRAs another thing I learned this week….we should all know this. If you are unsure about your elibibility or deductable amounts for your IRA or ROTH, you should still contribute as early as possible. The IRS makes an allowance for contributions that you then need to undo or roll to the next tax year.

    I unfortunalty waited until this week to fund my 2009 as I was unsure if I was elibigle, thus losing 1 year of investment time (athough missing out on the 1/2 half of 2009, not so bad).

    Again if you are unsure still contribute and then you can modify and adjust when you file. ( consult your tax advisor ;) )

    Here’s to a sucessful savings, investment and retirement for all in 2010.

    Blessings,

    Brian

  2. says

    Yes, the average family looking for a tax break needs not look much further. For all of the faults of the 401k (and there are some), there are not many other places where you can get a tax deduction of over $15,000.

    Also, many companies are re-instating the match making contribution amounts even more advantageous to the working man.

    Good article, Thanks….

    Jeff

Leave a Reply

Your email address will not be published. Required fields are marked *