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

New retirement plan limits let you sock away more in ’08

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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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