2010 401(k) Contribution Limits – The Sky is Not Falling

Posted on September 16, 2009

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A brief post over at Boston.com’s Managing Your Money blog makes the claim that “unless inflation really kicks up in the last few months of 2009, it appears that the amount that working individuals can contribute to their 401(k) will actually go down in 2010.”

Well, it’s possible, but my guess is that the IRS will keep the 2010 limits the same as the 2009 limits.

As a Forbes article published in August points out, the regulations that apply to how adjustments are made to contribution limits are not black-and-white. It’s not at all clear that the IRS will be forced to lower the limits.

According to a more recent article on the topic, government officials have been pretty quiet on the issue; the only statement to-date out of the IRS is that the agency is “aware of the issue.”

Independent of how the contribution limit issue is resolved, one piece of good news is that the Social Security wage base – the portion of wages subject to the 6.2% Social Security tax – will probably not increase for 2010.