Archives For Taxes

       This is just a simple one-stop resource to help you find out the contribution limits for various retirement plans. Click any of the following links to find the contribution limits for the corresponding retirement plan.

       To my regular readers: Thanks for putting up with these posts as I’ve been adding this information to the website!

SEP-IRA Contribution Limits

Corey —  April 6, 2010

Contribution Limits

       You cannot contribute directly to a SEP-IRA. However, your employer can contribute on your behalf. If you are self-employed, then this article will help you figure out the maximum you can contribute for yourself. The maximum amount you can contribute to a SEP-IRA depends only on your compensation. These are the correct SEP-IRA contribution limits for 2009 and 2010. Contributions to other qualified retirement plans (401(k), 403(b), SIMPLE, or SEP) will count toward this limit.

  • Up to 25% of your compensation, but not more than $49,000 total

Deadline for Contributions

       The deadline for contributions to SEP-IRAs is the same as the tax deadline for your employer. If you are self-employed, the deadline is April 15th. Otherwise, the deadline is generally March 15th unless you are on a fiscal year tax deadline. Any tax return extensions you file will also extend the deadline for SEP-IRA contributions.

Tax Deduction for Contributions

       SEP-IRA contributions are deductible by your employer (or if you’re self-employed, by your business or on Schedule C). You receive no deduction on your tax return for contributions made on your behalf to a SEP-IRA. These contributions are not eligible for the Retirement Savings Contribution Credit.

SIMPLE IRA Contribution Limits

Corey —  April 5, 2010

Contribution Limits

       The maximum amount you can contribute to a SIMPLE IRA depends on your age. These are the correct SIMPLE IRA contribution limits for 2009 and 2010. Contributions to other qualified retirement plans (401(k), 403(b), SIMPLE, or SEP) will count toward this limit. You cannot contribute more than 100% of your income.

  • Under age 49 at the end of the year: $11,500
  •  

  • Age 50 or older by the end of the year: $14,000

Deadline for Contributions

       Elective contributions are generally made from your paycheck, so you need to have your contributions set up within the year. You can choose to contribute everything at the beginning of the year if your plan allows it, or you can just contribute a certain amount or percentage from each paycheck.

Tax Deduction for Contributions

       SIMPLE IRA contributions reduce your taxable income, so you don’t need to take a tax deduction on your return. However, you may be eligible for the Retirement Savings Contribution Credit.

457 Plan Contribution Limits

Corey —  April 2, 2010

Contribution Limits

       The maximum amount you can contribute to a 457 plan depends on your age and the details of the plan. These are the correct 457 plan contribution limits for 2009 and 2010. Contributions to qualified retirement plans (401(k), 403(b), SIMPLE, or SEP) do not affect your 457 plan contribution limits. You cannot contribute more than 100% of your compensation.

  • Under age 49 at the end of the year: $16,500
  •  

  • Age 50 or older by the end of the year: $22,000 (only in governmental 457 plans, otherwise the limit is $16,500)

Special 457 Plan Catch-up Contributions

       If you are within 3 years of normal retirement age as defined by the 457 plan, you may be eligible to contribute up to an additional $16,500 per year. However, this special catch-up contribution is limited to your unused regular contribution limits from previous years. If you’ve contributed the maximum every year you’ve been in the plan, you won’t qualify for this special catch-up contribution. For more information, be sure to speak with your human resources department and consult the IRS website here and here.

Deadline for Contributions

       Elective contributions are generally made from your paycheck, so you need to have your contributions set up within the year. You can choose to contribute everything at the beginning of the year if your plan allows it, or you can just contribute a certain amount or percentage from each paycheck.

Tax Deduction for Contributions

       Your contributions to a 457 plan reduce your taxable income, so you do not need to claim a tax deduction on your return. However, you may be eligible for the Retirement Savings Contribution Credit if you contributed to a governmental 457 plan. Non-governmental 457 plan contributions will not qualify for that credit.

403(b) Plan Contribution Limits

Corey —  April 1, 2010

Contribution Limits

       The maximum amount you can contribute to a 403(b) plan depends on your age and years of service. These are the correct 403(b) plan contribution limits for 2009 and 2010. This limit can be split between multiple qualified retirement plans (401(k), 403(b), SIMPLE, or SEP), but the combined total of your contributions cannot exceed this limit. You cannot contribute more than 100% of your compensation.

  • Under age 49 at the end of the year: $16,500
  •  

  • Age 50 or older by the end of the year: $22,000

15 Year Rule

       If you have 15 years of service with a qualified organization, you may be eligible to contribute up to an additional $3,000 per year to your 403(b) plan. However, the rules for this can get tricky, so you should speak with the human resources department at work and read the IRS explanation of the 15 year rule.

Deadline for Contributions

       Elective contributions are generally made from your paycheck, so you need to have your contributions set up within the year. You can choose to contribute everything at the beginning of the year if your plan allows it, or you can just contribute a certain amount or percentage from each paycheck.

Tax Deduction for Contributions

       Your contributions to a 403(b) plan reduce your taxable income, so you do not need to claim a tax deduction on your return. However, you may be eligible for the Retirement Savings Contribution Credit.

Do I Need to File a Tax Return?

Corey —  April 1, 2010

       Not sure if you really need to file a tax return? Here’s a guide to figure out if you need to file a tax return.

2009 Federal Filing Requirements

       If your gross income is higher than the amount that applies to your situation according to the table below, you MUST file a tax return.

2009 Filing Requirements

       Here are some minor notes on using the chart:

  • If you were born on January 1, 1945 – you’re considered 65 as of the end of 2009.
  • If you’re married filing jointly and didn’t live with your spouse at the end of 2009 – you must file a return if you have at least $3,650 in gross income, regardless of your age.

       To figure out your gross income for this chart, include all income you received that is not exempt from tax. You must include any income you earned outside the US or from the sale of your home, regardless of whether you may exclude part or all of it.

       If you’re married filing separately and lived with your spouse at any time during 2009, you’ll have to include your Social Security benefits. Otherwise, only include Social Security benefits if one-half of your benefits, plus your other gross income, plus any tax-exempt interest totals more than $25,000 (or $32,000 if you’re married filing jointly). Not all of your Social Security benefits are taxable, so you’ll have to check out IRS Publication 915 to calculate the taxable portion of your benefits.

       Note: If you are self-employed, owe any special taxes (like AMT, penalties on early IRA withdrawal, etc.), or qualify for a refundable credit, these guidelines do not apply. For a list of all possible exceptions, check out this page on the IRS website.

State Filing Requirements

       The filing requirements for states vary by each state. In Pennsylvania, you’re required to file if you have $33 in taxable income (because $33 times the PA tax rate of 3.07% equals $1). Other states may have different rules due to the way they calculate state income taxes. The same goes for any local tax returns as well.

401(k) Plan Contribution Limits

Corey —  March 31, 2010

Contribution Limits

       The maximum amount you can contribute to a 401(k) plan depends on your age. These are the correct 401(k) plan contribution limits for 2009 and 2010. This limit can be split between multiple qualified retirement plans (401(k), 403(b), SIMPLE, or SEP), but the combined total of your contributions cannot exceed this limit. You cannot contribute more than 100% of your compensation.

  • Under age 49 at the end of the year: $16,500
  •  

  • Age 50 or older by the end of the year: $22,000 (only if your plan permits catch-up contributions)

Deadline for Contributions

       Elective contributions are generally made from your paycheck, so you need to have your contributions set up within the year. You can choose to contribute everything at the beginning of the year if your plan allows it, or you can just contribute a certain amount or percentage from each paycheck.

Tax Deduction for Contributions

       Your contributions to a 401(k) plan reduce your taxable income, so you do not need to claim a tax deduction on your return. However, you may be eligible for the Retirement Savings Contribution Credit.