Published on August 26, 2009
Low inflation has made food and gas more affordable during the recession, but there's a downside: Social Security beneficiaries probably won't get a raise next year, and the IRS may reduce the amount workers can contribute to their 401(k) plans.
For 2009, most workers can contribute up to $16,500 to their 401(k) plans, plus an additional $5,500 if they're 50 or older.
The IRS will announce 2010 contribution limits for 401(k) plans in October. Unless inflation picks up in August and September, the IRS could be forced to reduce the cutoff for contributions to $16,000 and the threshold for catch-up contributions could be reduced to $5,000.
This would mark the first time the IRS has reduced 401(k) contribution limits.