Comments on: 401(k) Limits to Decrease in 2010?

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Tue, 01 Sep 2009 18:18:20 +0000

If anything they should be increased especially the catch-up numbers– many soon-to-retires need to make up for losses . . . (I say that knowing the market has rebounded sharply, but haven’t made up total losses)

By: kitty

kitty — Sun, 30 Aug 2009 20:12:27 +0000

If it is tied to inflation, it doesn’t look like they have a choice.

Whatever. Sure it is nice to reduce my taxable income by 16500+5500 this year, but an extra thousand isn’t going to make that much of a difference. I’ll keep it in taxable accounts.

By: Kirk Kinder

Kirk Kinder — Sat, 29 Aug 2009 17:41:43 +0000

While I am sad to see the limits drop, they should stick with the law as written. If that means it drops due to deflation, then it drops.

The less these clowns tinker with the system, the better we are.

By: david M

david M — Sat, 29 Aug 2009 09:44:02 +0000

Jim,

You are most likely correct, Congress will change the law. However, this really is not a big deal even if it does happen.

First, very few people save the max of $16,500.

Second, the decrease is a whooping 3%.

Just noticed a different David so I will change my posting to David M, I also post at #9.

By: Jim

Jim — Fri, 28 Aug 2009 21:37:18 +0000

OK this is hardly a done deal. Its not a given that the IRS will lower the limit. The law apparently is vague enough that it doesn’t say explicitly if they have to lower it or not. Second if the limits were going to go down then I think its likely that congress would step in and amend the law to keep deflation from reducing the limits.

By: Paul

Paul — Fri, 28 Aug 2009 16:59:54 +0000

So our government not only wants to take over the auto industry and health care, now they want us to save less for our retirement (no doubt to make us more dependent on our hallowed govt). Egads.

Vote the rascals out.

By: david

david — Fri, 28 Aug 2009 16:43:19 +0000

Newretirement,

If you can figure out how to fire “deflation” then go right ahead and fire it.

It’s the law! Nothing more and nothing less. There is no “skewed end” at the IRS.

Let me guess, you don’t like government very much?

By: David

David — Fri, 28 Aug 2009 00:59:55 +0000

WTF, there’s no inflation so you should save LESS? Idiots. Saving in a deflationary environment only benefits YOU, not the retailers and financial geniuses who got us into this mess in the first place, so of course it has to go. Grrrr.

I’m stuffing as much as I can into my 401k for this year because I only started this job last month and was out of work since mid-Feb, so I have some catching-up to do.

By: J. Money

J. Money — Thu, 27 Aug 2009 22:05:16 +0000

Danngggg – good thing I’m maxing out this year’s next week. hope it at least stays the same though, but there could be worse things!

By: RJ

RJ — Thu, 27 Aug 2009 21:04:38 +0000

Of course I would want the amount to increase every year, but since the number is tied to inflation that’s unrealistic.

I don’t think they are sending the wrong message to anyone or have an ulterior motive of getting more money into the economy. It’s just the way the number is calculated.

By: Nickel

Nickel — Thu, 27 Aug 2009 20:32:38 +0000

newretirement.com: Unfortunately, it’s the law of the land. Time to fire Congress…

By: newretirement.com

newretirement.com — Thu, 27 Aug 2009 18:50:54 +0000

This is absurd, whoever thought of lowering 401(k) contributions should be fired. I can see it from the IRSâ€™s very skewed end that they want people to be spending money to help the economy out of this recession, but that will come eventually. We need to be saving just in case this mess happens again and sooner than we plan. Inform your Congressman immediately!

By: Nickel

Nickel — Thu, 27 Aug 2009 17:56:17 +0000

Found it. Looks like IRA limits are safe:

“IRAs donâ€™t face the same low-inflation pickle. The formula for computing IRA limits uses the trailing 12-month CPI (through August) to set IRA limits and that stat is expected to show an increase. It wonâ€™t likely be enough to budge the IRA limits up for 2010, but will ensure the limits can remain at their 2009 level: $5,000 for individuals 50 and younger; $6,000 if you are over 50.”

Source: http://moneyfeatures.blogs.mon.....s-in-2010/

By: Nickel

Nickel — Thu, 27 Aug 2009 17:54:31 +0000

Excellent question, and I’m not sure of the answer.

By: Courtney

Courtney — Thu, 27 Aug 2009 17:48:29 +0000

What about Roth IRA limits? I believe those are also tied to inflation as well, and would probably affect a lot more people. It’s much easier to max a $5K contribution than a $16K one.