2009 Tax Law Changes
Social Security Wage Base: The social security wage base increases to $106,800 in 2009. That means another $298 in taxes for anyone earning at least $106,800.
Social Security Benefits: Benefits increased 5.8% in 2009 due to the cost-of-living adjustment. This is the largest one-year adjustment since 1982.
Annual Gift Exclusion: You are able to give any person up to $13,000 in 2009 with no tax consequences. Remember, this limit should include gifts for the full year, including holiday and birthday gifts.
Retirement Plans:
- The maximum 401(k) contribution for 2009 is $16,000 ($22,000 if age 50 or older). The same holds true for 403(b) and 457 plans.
- SIMPLE IRA limits will rise to $11,500. If age 50 or older, you can contribute up to $14,000.
- Traditional & Roth IRA contribution limits stay the same at $5,000 or $6,000 if age 50 or older.
2009 Required Minimum Distributions: Congress passed legislation that suspends required minimum distributions for calendar year 2009. If you are currently taking distributions or if you turn 70 1/2 in 2009, you are not required to take the calculated distribution for 2009. This legislation allows you to keep your retirement plan fully invested, potentially allowing for a recovery from the market decline. As written, the required minimum distributions will begin again starting in calendar year 2010.
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