2008 and 2009 Contribution Limits For 401k

The IRS maximum contribution limits for defined contribution plans allow individuals and their employers to contribute more than ever before to a 401(k) plan. In addition to the opportunity to shelter from taxes a big portion of income, many 401(k) plans have a loan feature that can let its owners withdraw cash in times of need.

401(k) Contribution Limits for 2008
Salary Elective Deferral Limit $15,500
Maximum Employer + Employee Defined Contribution Plan Limit $46,000
Catch-Up Contribution Limit For Age 50+ $5,000

401(k) Contribution Limits for 2009
Salary Elective Deferral Limit $16,500
Maximum Employer + Employee Defined Contribution Plan Limit $49,000
Catch-Up Contribution Limit For Age 50+ $5,500

Source: www.irs.gov/retirement/article/0,,id=96461,00.html

A 401(k) provides a great tax break to employees who contribute to the plan, and no business is too small to have a 401(k). Even a small business with no employees or employing a spouse only can establish a One Person 401(k) plan. This includes independent contractors with 1099 income, freelancers, sole proprietors, partnerships, Limited Liability Companies (LLC) or corporations.

Key benefits of a 401(k) plan:
• High maximum contribution limit.
• Contributions are tax deductible and are based on compensation or earned income.
• Roth contributions with after-tax income can be made for tax free growth and withdrawals.
• Funds in a 401(k) grow tax-deferred.
• Assets can be rolled over from other qualified plans or IRA's into a 401(k).
• One can take a loan from a 401K (if allowed by the plan) - up to the lesser of 50% or $50,000 of account balance.

A One Person 401K also known as Solo 401K must be set up no later than December 31, to be eligible for tax deductions for that tax year.

Lamaute Capital, Inc. (http://www.InvestSafe.com) member FINRA, SIPC. "U.S. Treasury Circular 230 Notice: Any U.S. federal tax advice included in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal tax penalties."