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I really wish they would raise the maximum elective deferral you can save in your 401(k). Ya think that might actually help some folks who plan to retire some day.......




IRS Announces Pension Plan Limitations for 2011

IR-2010-108, Oct. 28, 2010

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2011. In general, these limits will either remain unchanged, or the inflation adjustments for 2011 will be small. Highlights include:

The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government’s Thrift Savings Plan remains unchanged at $16,500.


The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.



http://www.irs.gov/newsroom/article/0,,id=229975,00.html
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I really wish they would raise the maximum elective deferral you can save in your 401(k). Ya think that might actually help some folks who plan to retire some day.......

The reason for the limits is that wealthy people would be able to put a very large part of their income behind a tax sheltered wall (meaning no tax receipts for the government) while poorer people, who have less savings in general, and who need to spend a higher proportion of their income on necessities like food and shelter, would not.

Put $15,000 (plus or minus) away for 20 or 30 years, and you'll have well over a million; invest it decently and let it compound and you will have several million.
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I really wish they would raise the maximum elective deferral you can save in your 401(k). Ya think that might actually help some folks who plan to retire some day.......

So buy non-dividend producing stocks in a taxable account - no rule against that.
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Put $15,000 (plus or minus) away for 20 or 30 years, and you'll have well over a million; invest it decently and let it compound and you will have several million.



heh.


made me look --i worked about 40 yrs ..first 20 i never made as much as 15K; next 10yrs, 15K was about half my income


not that that means a thing
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Frankly I've always thought people who don't have a defined benefit pension plan should be able to contribute an extra (say) $5000 a year. They'll need to rely on personal savings more than folks who have a pension.

#29
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I really wish they would raise the maximum elective deferral you can save in your 401(k). Ya think that might actually help some folks who plan to retire some day.......

The reason for the limits is that wealthy people would be able to put a very large part of their income behind a tax sheltered wall (meaning no tax receipts for the government) while poorer people, who have less savings in general, and who need to spend a higher proportion of their income on necessities like food and shelter, would not.


I suspect it makes less difference than either of you think. In my experience the Highly Compensated Employee limit of $110k makes the higher limit meaningless, as virtually of the people who could actually afford to contribute more are actually limited to an even lower number. I was able to max out my contributions for only a couple of years before crossing that line, after which my limit was significantly lower.
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Come on - let's give the folks who are working for retirement some help

Goofy- The reason for the limits is that wealthy people would be able to put a very large part of their income behind a tax sheltered wall

Some how I just can't see raising the limit $1000 or two as a real threat to the tax coffers of America.

Put $15,000 (plus or minus) away for 20 or 30 years,

I think these folks deserve a little plus....



AllDone - So buy non-dividend producing stocks in a taxable account - no rule against that.

Buy and Hold - A strategy that seems to have worked well over the last couple of years. For some folks who want the security of debt - treasuries, investment grade etc. - can't see how equity is attractive...



Ziggy - Agreed:



RH I suspect it makes less difference than either of you think

Great, then we could change it with little impact!!! Except, perhaps to a few hundred thousand hard working America's that do max out their 401(k) contributions and could add more: because a significantly large population of folks are not in companies where HCE makes a mark.
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RHinCT,

There is of course something you can do about that, work for a company that has a safe-harbor provision, which means HCE compensation does not apply. Or lobby your HR to change the 401k plan. I used to be subject to HCE limitations too back from 2000 through 2004, but no more since working at different companies. The ability to contribute more has really made a difference in my retirement nest egg, despite very variable returns.
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Some how I just can't see raising the limit $1000 or two as a real threat to the tax coffers of America.

Oh. I thought you were advocating some real change, not just bumping it up a few bucks.

For the record, the maximum in 1986 was $7,000. Adjusted for inflation, that would be $13,500 in today's dollars. So the limit has been raised already by $2,000 more than inflation, because it's now $15,500. (It went to $11,000 in 2002, with added "catch-up" provisions for people over 50. It's been raised even more for most people in a position to save those extra dollars.)

So your wish has already been granted. However, like most, I'm sure you want more. And that's the problem, no matter what it is, for some people it's never going to be enough. Raise it $1,000? Why not $2,000. If $2,000, why not $5,000? If $5,000, why not $10,000?
 
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Wow - just edging out inflation: That is quite a record!!

I thought it was now $16,500
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I thought it was now $16,500

You are correct. I plead brain fart.

Wow - just edging out inflation: That is quite a record!!

I wouldn't call a 25% boost "just edging out".
 
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It is all good Goofy - I didn't ask for more when FDIC insurance went up well above inflation - especially the unlimited on demand deposits... But of course that republican banker in me - just always wants a little more :)
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