What are the 401K and IRA limits for next year (2012)?

Question

Are 401K and IRA contribution limits increasing next year? If so, what are the new limits? Thank you!!

(Edit - I updated question to reflect 2012, and will update my answer accordingly)

Answer 1

While a seemingly simple question, next year may be different. Interestingly, the 2010 contribution limits for 401(k) and IRA plans is tied to the rate of inflation. PF blogger fivecentnickel.com posted the following article, 401(k) Limits to Decrease in 2010?, which mentioned:

Inflation has been negative since March so, unless it picks up between now and October, the IRS will have no choice but to reduce contribution limits. If this happens, the contribution limits would fall from $16,500 to $16,000 with catchup contributions falling from $5,500 to $5,000.

[Emphasis mine]

There's also a good article at CNNMoney.com, New rule may mandate lower 401(k) contribution limits in 2010. Check it out, too.

The final limits are supposed to be announced some time in October (i.e. later this month.) I'll post a follow-up when I read about the announcement.

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UPDATE: The final 2010 401(k) contribution limits were announced by the IRS; see this IRS press release:

IR-2009-94, Oct. 15, 2009 [...]

The limitations that are adjusted by reference to Section 415(d) will remain unchanged for 2010. This is because the cost-of-living index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) will be $16,500 for 2010, which is the same amount as for 2009.
[...]

In other words, the 2010 employee contribution / deferral limit for a 401(k) plan is to be the same as in 2009: $16,500. If you are age 50 or over, additional catch-up contributions for a 401(k) plan remain limited to $5,500.

For Individual Retirement Accounts, the contribution limit for 2010 is also to be the same as in 2009: $5,000. If you are age 50 or over, additional catch-up contributions for an IRA remain limited to $1,000.

Answer 2

2012 sees no change for IRA, $5000, or $6000 if 50 or older in 2012. 401(k) limit increased $500 to $17,000, or $22,500 if 50 or older in 2012.