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Date posted: October 26, 2009

401(k) Plan and IRA Contributions Limits Unchanged for 2010

If there is a sufficient increase in the Consumer Price Index (CPI), the IRS can adjust the contribution limits. However, in the past year, the CPI actually declined,  but the IRS announced that contribution limits for 2010 will not be reduced. They remain at:

  • $16,500 for contributions by those under age 50 to 401(k) plans, 403(b) annuities, and 457 plans
  • $22,000 for contributions by those age 50 and older to 401(k) plans, 403(b) annuities, and 457 plans
  • $11,500 for contributions by those under age 50 to savings incentive match plans for employees (SIMPLE plans)
  • $14,000 for contributions by those age 50 or older to SIMPLE plans
  • $5,000 for contributions by those under age 50 to traditional IRAs and Roth IRAs
  • $6,000 for contributions by those age 50 and older to traditional IRAs and Roth IRAs

Self-Employed Individuals

The contribution limits for simplified employee pension (SEP) plans and profit-sharing plans also is unchanged, at $49,000. Only compensation up to $245,000 can be taken into account in figuring the deductible contribution amount; this is the same compensation limit that applied in 2009.

Retirement Savers Credit

Taxpayers with low income who contribute to a retirement plan or IRA may qualify for a tax credit of up to 50% of the contribution up to $2,000, for a top credit of $1,000; those with more modest income may claim a credit of 20% or 10% of the $2,000 contribution limit. The modified adjusted gross income (MAGI) limits for determining eligibility will rise in some instances very slightly in 2010. For example, the maximum credit limit will apply to joint filers in 2010 with MAGI of up to $33,500; it had been $33,000 in 2009.