Pension Limits Increase for 2009

The economy may be down, but the limits on how much you can fund your company based retirement accounts have increased for 2009. This may provide an opportunity to capture more value in stocks based on the current market conditions, if cash flow permits. The Internal Revenue Service has recently announced cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2009. Starting January 1, 2009, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $185,000 to $195,000. The total limitation for defined contribution plans, such as 401(k) plans, is increased from $46,000 to $49,000. The annual payroll deferral amount for 401(k) plans has also increased from $15,500 to $16,500 starting in 2009. The catch - up contributions for those who are 50 and over have also increased starting in 2009. The 401(k) catch - up has increased from $5,000 to $5,500 and the Simple IRA plan catch up has remained the same for 2009 at $2,500.