401(k) Investors – 2010 Contribution Limits and Savings Tips

Every year, the IRS sets specific limits on how much money 401(k) investors can stuff away into their retirement account. In 2010, there are no changes from 2009, so the limits are as listed below:

• Investors Under 50 yrs old : $16,500/yr
• Investors Over 50 yrs old (Catch-Up Contribution) : additional $5,500/yr for a grand total of $22,000/yr

In working with numerous investors to help them maximize their savings, they ask us how much that means based on their payroll schedule, so here you go:

• $16,500 = $317.31/week or $634.62/bi-weekly paycheck
• $22,000 = $423.08/week or $846.15/bi-weekly paycheck

NOTE: If your 401(k) provider requires you to list a percentage for your savings rate, make sure you have this correctly calculated, as we meet a lot of people that have “front loaded” their 401(k), meaning they put a lot of their savings away during the first part of the year, and then none after they hit the limits listed above. This keeps you from gaining the benefits of dollar cost averaging throughout the year, thus decreasing your “timing risk.”

We understand that is a LOT of money to save, but for those of you trying to maximize your savings, there is the quick and easy number. If you would like to discuss this relative to your personal situation, do not hesitate to contact us at (888) 738-8780.