Did you know that annual contribution limits for tax-qualified employer-sponsored plans might increase annually? This increase (or decrease) is determined by cost-of-living adjustments provided for under the Internal Revenue Code. Thanks to a combination of contribution limit increases, participants in many employer-sponsored plans may significantly increase their contributions to those plans. As a result of those limit increases, many participants in 403(b) plans, 401(k) plans and 457(b) plans are able to make voluntary contributions of as much as 100% of includible compensation up to an elective deferral limit or, for 457(b) plans, a dollar limit of $16,500 in 2009 and 2010.

In addition, employees in many of those same plans who are age 50 or older may contribute an additional $5,500 in 2009 and 2010 as an age-based catch-up contribution, subject to increase in $500 increments as the cost of living rises.

Catch-up deferrals do not count toward otherwise applicable limits or nondiscrimination tests, and they also generally cannot be layered on top of certain otherwise available catch-up limitation in 457(b) plans. However, catch-up deferrals for 403(b) programs, such as the $3,000 service-based catch-up contribution limit, may be made in addition to the increased 402(g) limit for certain long-time employees of qualifying employers ("cap expansion"). 

Contributions to tradional and Roth IRAs remain at $5,000 in 2009 and 2010. Contributions to ROTH IRAs are limited based on modified adjusted gross income.

IRA owners age 50 and older are also able to make annual catch-up contributions of $1,000 in 2009 and 2010.

Finally, compensation that may be taken into consideration in determining employer contributions to tax-qualified plans and 403(b) plans under IRC section 401(a)(17) is $245,000 in 2009 and 2010 (indexed thereafter in $5,000 increments).