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Retirement Funding Options Make it Important to Start Planning Now!

The tax law includes great news for everyone trying to build a tax-advantaged retirement plan. Steadily increasing contribution limits affect almost every type of retirement plan — IRA, 401(k), profit sharing, and pension — and there are even special additions to allowable contributions for persons over age 50, about the time most of us get serious about retirement planning. Qualified retirement plans of all kinds are extremely valuable to many people. The maximum contribution to either a traditional or Roth IRA in 2008 and 2009 is $5,000. Persons over age 50 are allowed to contribute an additional $1,000 per year.

401(k) and other employer-sponsored deferred compensation plans also offer increasing limits remaining at $15,500 in 2008 but increasing to $16,500 in 2009. Persons over age 50 are permitted to make additional annual contributions to 401(k) plans of $5,000 in 2008 increasing to $5,500 in 2009.

The maximum annual contribution to a SIMPLE plan remained at $10,500 for 2008 but will increase to $11,500 in 2009. Persons over age 50 are allowed to contribute an additional $2,500 per year.

Employers are encouraged to sponsor qualified plans by tax credits and special deductions for the costs of adopting and administering new plans. The IRS will even reduce or eliminate user fees for plan rulings to employers with fewer than 100 employees.

Whether you are interested in how the limits on retirement plan contributions might affect your personal financial plan, or you are an employer considering adopting or expanding the coverage of an existing plan, we can advise you about how the tax law affects retirement planning. Please call for an appointment.