New retirement plan limits let you sock away more in ’08 — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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New retirement plan limits let you sock away more in ’08

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in Small Business Tax

Prior to the start of a new year, the IRS announces cost-of-living adjustments (COLAs) for certain retirement plan thresholds. Because inflation has been relatively low, don’t expect any giant jumps for 2008. And a few thresholds didn’t budge at all.

Strategy: Whenever possible, take your retirement plan contributions to the max. The extra nickels and dimes you can salt away in a tax-qualified plan can grow into hundreds of dollars by the time you’re ready to retire. It’s all due to the power of tax-deferred compounding.

Here’s a side-by-side comparison of the retirement plan thresholds for the current year and next year.

Be aware that the annual limit for contributions to IRAs—including contributions made to Roth IRAs—increases from $4,000 in 2007 to $5,000 in 2008. The 2008 IRA limit—including $1,000 catch-up contributions for taxpayers age 50 or older—is $6,000. These increases aren’t COLAs; they’re mandated b...(register to read more)

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