Major Tax Changes for Year 2009

Retirement/Pension Plans

IRA: For year 2009, a qualified individual who will be at least age 50 by the end of the tax year is allowed to make an additional "catch-up" contribution to a traditional or Roth IRA in the amount of $1,000. If a qualified individual will attain age 50 before the end of a calendar year, the individual will be deemed to be age 50 as of January 1 of that tax year.

For 2009, you may still be able to take a full IRA deduction if you were covered by a retirement plan and your 2009 modified AGI is less than $109,000 (married filing jointly or qualifying widow(er)), $65,000 (single or head of household), or $65,000 (married filing separately). A partial deduction is allowed until your AGI reaches $109,000 if married filing jointly or $65,000 if single or head of household.

SIMPLE IRA: This type of plan may only be established by an employer that has 100 or fewer employees who receive at least $5,000 in compensation in the preceding year. These are generally employer sponsored plans which may permit employee contributions. For 2009, an employee who will be at least age 50 by the end of the tax year is able to make an additional "catch-up" contribution to a SIMPLE retirement plan in the amount of $2,500.

Elective Deferral 401(k): These are generally employer sponsored plans which may permit employee contributions. For 2009, an employee who will be at least age 50 by the end of the tax year is able to make an additional "catch-up" contribution to an elective deferral 401(k) retirement plan in the amount of $5,500.

* Individuals age 50 or older by the end of the year may make catch-up contributions as explained above.

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