Retirement Planning Savings Limitations

As we all understand from reading this and other sites, deferred investment programs (like 401(k), 403(b), IRA) are very beneficial to a solid retirement plan. These programs allow you to defer the taxes that you pay on income generated from your retirement assets. The government does however place limits on how much you are allowed to invest in these programs. The maximum contribution amounts have been changing every year. Below is a short table to help you understand what the current limitations are:

The table above indicates that there are additional amounts that you are allowed to invest in the indicated program if you are over the age of 49 (50 and over). These amounts are above and beyond the amounts that are defined under the maximum contribution - for example, the maximum Simple IRA contribution for someone aged 48 is $5,000, but for someone age 50, the maximum contribution is $6,000.

Some additional limitations also exist. For a defined contribution plan, which are funds that the company sets aside in a pension or retirement program, the maximum that a company can set aside is 25% of an employees compensation up to a limit of $49,000 (for 2009).