The economy has a lot to do with the changes in many financial plans these days. With the low cost of living, increasing prices of commodities, and an existing economic crisis, it is not easy for the IRS to just increase the 401K maximum contribution 2010.
The contribution limit of 2009 for less than 50 years old employees was set at $16,500. This amount is a thousand dollars higher than the limit of 2008. The catch-up contribution for above 50 years old employees was at $5,500 in 2009 and 2010.
The 401K maximum contribution 2010 extends to the current year – meaning, this year’s maximum contribution hasn’t changed in 3 years in a row. Maybe good news for most employees and self-employed individuals, but if you’ll look at it in a complete financial angle, the retained amount is an indication of serious economic issues.
As the economy plunges, many aspects in the financial sector naturally follow suit. It is difficult to simply increase the 401K maximum contribution 2010 when there’s a downward trend in the financial sector. Some folks may be wondering if the coming years’ contribution limits would also plunge if the economy will not improve. However, it is apparent that the amount of the contribution limits will only remain the same as that of the previous year if these factors are still predominant in the current year.
Should you worry about it?
Yes and no. Yes, because the economy is not improving; even if it does, there’s little impact on the benefits of employees including 401K. No, because it can still change in time and you’ll have more opportunities to save if you have more funds at hand.
The younger generation of employees and self-employed individuals may have not felt the serious effects of the 401K maximum contribution 2010. But this year, the contribution limits have been retained due to the same reasons. It is best to start looking for ways to save the extra cash that’s meant for your 401K. If the contribution limits will increase in the coming years, you have the extra money to help meet your contribution requirements.