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What are the retirement plan contribution and benefit limits for the 2010 tax year?
The effective date for 2010 limits is January 1, 2010
MAXIMUM DOLLAR LIMITS
This chart lists the maximum amounts individuals are permitted to contribute to their retirement plans each year.
| 2010 | 2009 | 2008 | 2007 | |
| Annual employee contribution limit for 401(k), 403(b), or 457 savings plans | $16,500 | $16,500 | $15,500 | $15,500 |
| Annual catch-up contribution limit for 401(k), 403(b) or 457 savings plans if employee is age 50 or over | $5,500 | $5,500 | $5,000 | $5,000 |
| Maximum annual benefit payable by a defined benefit pension plan | $195,000 | $195,000 | $185,000 | $180,000 |
| Annual limit for combined employer – employee contributions to a defined contribution plan | $49,000 | $49,000 | $46,000 | $45,000 |
| Annual contribution limit to an Individual Retirement Account for individuals | $5,000 | $5,000 | $5,000 | $4,000 |
| Annual catch-up contribution limit for Individual Retirement Accounts for individuals age 50 or over | $1,000 | $1,000 | $1,000 | $1,000 |
| Annual employee contribution for SIMPLE plans | $11,500 | $11,500 | $10,500 | $10,500 |
| Annual catch-up employee contribution for SIMPLE plans if employee is age 50 and over | $2,500 | $2,500 | $2,500 | $2,500 |
| Maximum monthly amount insured by the Pension Benefit Guaranty Corporation for people retiring at age 65. | $4,500 | $4,500 | $4,312.50 | $4,125 |
| Maximum amount of wages taxable by Social Security | $106,800 | $106,800 | $102,000 | $97,500 |
Financial Partners, Inc. does not render legal, accounting or tax advice. Please consult your CPA or attorney on such matters. This chart was provided by the Pension Rights Center (http://www.pensionrights.org/).
Click here to learn more about key financial data for the 2010 tax season.
What are the changes being made to Roth IRAs in 2010?
There are a number of changes being made to the rules for Roth IRAs for the 2010 tax year. The taxable income can be deferred until 2011 and 2012; direct rollovers will be allowed from 401(k)s to Roth IRAs; contribution limits are staying at 2009 levels; and Roth IRA Recharacterization will allow you to reverse the conversion before October 15th, 2010, if the Roth IRA turns out to be unsuitable for your needs.
Contributing to a retirement plan is an important decision in which the investor should consider their tax and financial situation before making a long term choice. An investor may wish to employ the help of a financial or tax professional to assist them in making this decision.
In order for the earnings of a Roth IRA to be free from federal income tax the account must have been held for five taxable years starting with the first contribution (or upon conversion into) the Roth IRA and until the account holder reaches 59 ½, dies, becomes disabled or uses the withdrawal for first-time homebuyer expenses (up to a $10,000 lifetime limit).
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What is the difference between a traditional IRA and a Roth IRA?
Both traditional IRAs and Roth IRAs are a great way to save for retirement, although they each have different advantages. The biggest difference is how taxes are treated.
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What is a Unit Investment Trust (UIT)?
A Unit Investment Trust (UIT) is a US investment company offering a fixed (unmanaged) portfolio of securities having a definite life.
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What is an Exchange Traded Fund (ETF)?
An Exchange Traded Fund is an investment fund traded on stock exchanges that holds assets, such as stocks or bonds, and trades at approximately the same price as the net asset value if its underlying assets.
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