2010 401(k) Contribution Limits Could Fall

The current 2009 limit for employee contributions to a 401(k) is $16,500, with employees over 50 able to contribute an additional $5,500 as a catch-up. When the IRS announced the 2010 contribution limits in October, we may find that the limit will be lowered because there is a provision in the law that requires that contribution limit to be pegged to inflation. The formula compares 2009 third quarter inflation versus 2008 third quarter inflation to calculation the contribution limits. Inflation was 4.94% in September 2008, it’s negative this year (since as far as March!).

In 2010 IRS could cut 401(k) contribution limit to $16,000 [USA Today]