2009 401k limits increase, IRA limits the same

[atomicrc11]

According to the Boston Globe, in 2009 401k limits will increase to $16,500, a $1000 increase, and catch-up contributions go up $1500, to $22,000.

Contribute more to your 401(k) in 2009 - Managing Your Money - Boston.com

Good for people with access to 401ks, 403bs and 457 plans. The bad news is the IRA contribution limits are still $5,000 for regular contributions and $6,000 for catch-up contributions. Seeing as though we had some inflation this year, I'm not sure why they didn't go up.

[disneysteve]

The IRA limit will only increase in $500 increments so there has to be enough inflation (about 10%) to trigger an increase from $5,000 to $5,500.

Unfortunately, the 401k increase doesn't help us. My wife has a 401k but is only allowed to put 50% of her salary in and that is well below the $16,500 limit. I don't have a 401k.

[atomicrc11]

The fact that some people don't have 401ks means they should be raising the limit. $5000 is not a whole lot of money per year.

[disneysteve]

The fact that some people don't have 401ks means they should be raising the limit. $5000 is not a whole lot of money per year.

I agree. The fact that they put these things in place without inflation-indexing from day one is ridiculous. The IRA limit was $2,000 for 20 years.

[zetta]

DisneySteve,
As doctor and so a small business owner, what kinds of retirement plans are available to you? What do you offer to your staff?

[disneysteve]

DisneySteve,
As doctor and so a small business owner, what kinds of retirement plans are available to you? What do you offer to your staff?

I don't own my practice. I'm a physician-employee, so I'm in the same boat as everyone else. My practice doesn't offer any type of retirement plan. I'm totally on my own as far as retirement savings is concerned. I've got Roths for me and my wife and everything else is in taxable accounts except for her 401k.

[Ima saver]

Steve is right. The IRA limit was only $2000 a year for all the years that I worked. That is why I don't have that much in my IRA.

[jIM_Ohio]

I don't own my practice. I'm a physician-employee, so I'm in the same boat as everyone else. My practice doesn't offer any type of retirement plan. I'm totally on my own as far as retirement savings is concerned. I've got Roths for me and my wife and everything else is in taxable accounts except for her 401k.

solo 401k not an option?

[zetta]

I don't own my practice. I'm a physician-employee, so I'm in the same boat as everyone else. My practice doesn't offer any type of retirement plan. I'm totally on my own as far as retirement savings is concerned. I've got Roths for me and my wife and everything else is in taxable accounts except for her 401k.

Seems like it would be worth your while to research an affordable way for the owners of your practice to offer a 401k and present it to them.

[disneysteve]

solo 401k not an option?

As I understand it, solo 401k plans are for folks who are either self-employed or sole proprietors. I am neither. I'm a regular old employee.

[gekkoplus]

If I contribute $15,500 to my 401K, can I still contribute full $5000 towards my IRA in 2008? ($16,500 + $5,000 in 2009?)

[atomicrc11]

Yes, you can fully fund a 401k and a Roth IRA. The one thing you will have to check is your eligibility to contribute to a Roth IRA. If you make more than $160k as a married couple or $116k as a single filer you cannot contribute to a Roth IRA.

[Daylily]

I guess 16,500 will be my challenge for next year. As long as I don't lose my job this year, I'll hit the 15,500 mark in December for the first time ever.

Not sure if I can swing the extra 5000 into an IRA.

[jIM_Ohio]

As I understand it, solo 401k plans are for folks who are either self-employed or sole proprietors. I am neither. I'm a regular old employee.

Here are two references

http://www.irs.gov/pub/irs-pdf/p560.pdf

(does section on common law employee fit what you do?)
Would a simple IRA work?

Small Business Retirement Plans - T. Rowe Price

Again I might refer you to section on Simple IRAs.

[Russell]

I guess 16,500 will be my challenge for next year. As long as I don't lose my job this year, I'll hit the 15,500 mark in December for the first time ever.

Not sure if I can swing the extra 5000 into an IRA.

I'd put $5k in ROTH first, the advantage is that I can take out my contributions penalty free. A flexibility people can utilize in tough financial situations.

Do others agree?