Many analysts feared that the IRS would reduce the maximum that workers could contribute to their 401(k) plans. Fortunately the Treasury Department decided not to reduce the limits for 2010.

As recently as September 2009 it was predicted that we would see a decrease in the maximum allowable contributions because of the formula used to set the limits. The limits are tied to inflation and are calculated by comparing inflation rates from the prior year. The 2009 rates compared to the 2008 rates could have led the IRS to reduce the maximum, but apparently they felt it was important to allow the rates to remain unchanged.

So for 2010 the maximum allowable contributions will remain at $16,500 with the catch-up contribution amount for workers over the age of 50 remaining $5,500.

If you would like further information about 401(k) plans feel free to reach out to Kevin Mason at Genesis at 781-314-1136.