After concern that the limits may actually be lowered, the IRS today announced that pension plan contribution limits will remain level with 2009.  The specter of a downward adjustment arose because the cost-of-living index that the IRS uses to calibrate contributions dropped during the third quarter of 2009.  However, the IRS says the Social Security Act prohibits them from reducing these limits.  Therefore, the maximum 401k contribution that can be made pre-tax remains at $16,500 for 2010. For individuals who turn 50 before the end of 2010, the law allows for an additional $5,500 to be contributed.  This is called the “catch-up” contribution.

Progression of pension contribution limits

• 2004 - $13,000
• 2005 - $14,000
• 2006 - $15,000
• 2007 - $15,500
• 2008 - $15,500
• 2009 - $16,500
• 2010 - $16,500