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October 16, 2009
With the econonmy in the crapper everyone was afraid that the IRS was going to lower the 2010 401k and Roth IRA limits. But when the IRS finally released the 2010 numbers everyone, including myself, was happy to see that they kept the limits the same as 2009.
Here is the breakdown:
2010 401k Contributions
Contribution Limit: $16,500
Catch-up 50 years and older: $5,500
2010 Roth IRA Contributions
Contribution Limit: $5,000
Catch-up 50 years and older: $1,000
So as you can see there is no real difference from last year. Don’t forget that you can contribute to a ROTH IRA up intil April 15th for the previous year.
My advice for retirement savings is to always contribute to your 401k up to the company match, if any. Then max out your Roth IRA to $5000 before increasing your contribution in your 401k to try to max it out at $16,500.
With the recent recovery in the market I think people are starting to realize that long term investing is the way to go as long as you shift your portfolio to safer investments as your time to retirement decreases.
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It would have been nice to see the Roth IRA limits increased, but at least they didn’t decrease like the projected social security payments for the next few years. It’s great advice you’ve given… to max out your 401k to the company match, then max out your Roth IRA, then fund your 401k up to the remaining limit. A Roth IRA gives you much more control over the types of investments you have as well as the expenses related to those investments.