2010 IRS Maximum Allowed 401k Contribution Announced

Update: the 2011, 2012, 2013, 2014, 2015, and 2016 401K maximum contribution amounts have now been released since this post was written. What follows is for 2010.

Being that this is National Save for Retirement Week, it seems appropriate to share some bittersweet news that I just learned. The IRS has recently made the big announcement regarding 401K maximums for 2010.

The Maximum 401K contribution in 2010 will be…<drumroll>

Identical to 2009. <Cymbals crashing and silence>

That’s right, the IRS maximum allowed 401K contribution will stay the same as 2009’s 401K contribution maximum at $16,500. The 401K catch-up contribution for those over 50 years old will also stay the same at an additional $5,500 over the standard. For reference, 2009’s 401K maximum had increased $1,000 over 2008’s $15,500 maximum. Why is this bittersweet? Read on.

The Bitter Part of 401K Maximum Contributions Staying the Same

401k maximumThis news is a little bitter due to the fact that the maximum contribution level has increased in all but six years going back to it’s beginning in 1987 (almost 3/4 of the time). It’s also worth noting that in that time period the maximum 401K contribution amount has never declined.

The Sweet Part of 401K Maximum Contributions Staying the Same

At the same time, there had been rumblings that the maximum 401K contribution level might actually decrease in 2009 for the first time due to the Consumer Price Index (CPI) decreasing year over year. For all of us who maximize our 401K contributions each year, that would have been a big step back.

Let’s hope that 2011 brings only sweet news of another increase. The maximum 401K contribution limit has never stayed the same three years in a row, so we do have history on our side.

Looking to Roll Over your 401K?

If you have old 401K’s sitting around, you might be losing a ton of money on 401K fees. Often times, it’s a lot cheaper to maintain your own IRA. I moved my traditional and roth IRA to TradeKing, who has zero maintenance fees and trades are only $4.95.

401k Discussion:

  • Are you excited, disappointed, or indifferent to this 401K news?
  • Do you plan on maxing out your 401K in 2010?
  • Have you ever maxed out your 401K. How did it feel?

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