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Archives For April 2010

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

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  • 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.

In Investing, Retirement, Taxes
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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.

In Taxes
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