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These are the key changes in 2009 for 403b and 401k contributions:

1. The maximum employee contributions go up to $16,500 (unless you are over 50 and then you are permitted to add another $5,500).  This increases the maximum contribution to $22,000.

2. For defined contribution plans, such as the traditional “Keogh” or self-employed plan, the new maximum contribution is $49,000).

3. The maximum contributions for IRAs are $5000 and (an additional $1000 if you are over 50), and for Simple IRA’s it is now $11,500 (an additional $2500 if you are 50 and up).

4. For those filing standard tax forms (not itemizing their deductions) in 2009, your deduction amount is $11,400 for married filing jointly and $5700 for single filers.

5. There was an increase in the amount you are allowed to earn without a reduction in benefits for those who are between ages 62 and 66 who are taking Social Security but still working. That amount is now $14,160. Beyond that amount, you have to give back $1 for every $2 you earn. For those born before 1943, after age 65 you can earn any amount or salary without a give back on benefits. For those born after 1944, this rule applies after age 66.

6. There is now a higher gift limit as well. Your annual gift limit exclusion or the tax free gift is $13,000. However, the additional lifetime exclusion of one million continues unchanged.

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Tags: 401k, 403(b), ira contributions, lee rosenberg, tax form, tax preparation, tax tips, Taxes

About the Author: Lee Rosenberg is the Co-founder of ARS Financial Services, Inc. As a Certified Financial Planner with more than 34 years of solid financial expertise. Lee is a registered representative of Cadaret, Grant & Co., Inc. He was also named one of the top 25 Independent Financial Advisers in the US by Rep magazine.

This entry was posted on Tuesday, February 17th, 2009 at 11:50 am and is filed under Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.