National Planning - Retirement Plan Limits : Article: Retirement Plan Limits

How Much Money Can I Put into My IRA or Employer-Sponsored Retirement Plan?

All types of IRAs and employer-sponsored retirement plans are subject to annual contribution limits set by the federal government. The limits are generally adjusted periodically to compensate for inflation and the increase in the cost of living.

IRAs

For the 2010 tax year, you can contribute up to $5,000 to all IRAs combined, the limit will be adjusted for inflation annually. For instance, if you have a traditional IRA as well as a Roth IRA, you can only contribute a total of the annual limit in one year, not the annual limit to each.

If you are age 50 or older, you can also make an annual $1,000 “catch-up” contribution.

Employer-Sponsored Retirement Plans

Employer-sponsored retirement plans, such as 401(k)s and 403(b)s, have a 2010 contribution limit of $16,500; individuals aged 50 and older can contribute an extra $5,500 as a catch-up contribution.

If you are currently contributing to an IRA or an employer-sponsored retirement plan, it may be wise to check the contribution limit each year in order to put aside as much as possible.

Distributions from traditional IRAs and most employer-sponsored retirement plans are taxed as ordinary income and may be subject to an additional 10% federal income tax penalty if taken prior to reaching age 59 ½. If you participate in both a traditional IRA and an employer-sponsored plan, your IRA contributions may or may not be tax deductible, depending on your adjusted gross income.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.

All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy.

EFS Financial Resources, LLC is a Registered Investment Adviser. Investment Adviser Representatives of EFS Financial Resources, LLC may transact advisory business in a particular state only if first registered, excluded or exempted from investment Adviser Representative requirements. In addition, follow-up conversations or meetings with individuals in a particular state that involve either the effecting or attempting to effect transactions in the rendering of personalized investment advice for compensation, will not be made absent compliance with state Investment Adviser Representative registration requirements, or an applicable exemption or exclusion. Securities licensed associates of EFS Financial Resources, LLC, are Registered Representatives offering securities through NATIONAL PLANNING CORP. (NPC), NPC of America in FL & NY, Member FINRA/SIPC. EFS Financial Resources, LLC and NPC are separate and unrelated companies.

When you link to any of the web sites provided herewith, you are leaving this site. EFS and NPC make no representations as to the completeness or accuracy of the information provided at these sites. Nor are the companies liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technology, sites, information and programs made available through this site. By clicking on the link you will leave our website and assume total responsibility and risk for your use of the site.