My Dad called me the other day and we started talking about retirement. (Hi, Dad!) Our conversations got me to thinking about retirement account limits for 2008. My wife makes mandatory contributions to a pension plan, I have a 403b account, and we both have Roth IRAs. We are both in our 30’s. I do not receive any ‘matching’ contributions from my employer. We have a modified AGI of less than 150K. For more information about 403b contribution limits, refer to IRS Publication 571. For more information about IRA contribution limits, refer to IRS Publication 590. (By the way, I know very, very little about taxes or retirement accounts. Please, do your own research and consult a qualified financial professional before making any financial decisions, especially decisions about taxes and retirement accounts. I’m simply writing a post about what I’m doing and I am in NO WAY suggesting that you should do as I do. Seriously, I don’t even trust myself with a credit card, so what do I know? :)) After doing a little research, the actual limit for 403b contributions for 2008 is a little difficult to figure out. Most sources report the 2007 limit of $15,500 but then suggest that the limit, starting in 2008, will go up by $500 per year.
So, for 2008, my retirement account contribution goals will be (based on assumed contribution limits):
|2008||Under 50||Over 50|
|403b||$15,500||Up To $20,500|
|Roth IRA||$5,000||Up To $6000|
I included the “Over 50” numbers for my Dad! So, in 2008, my goal will be to put $25,500 into our retirement accounts. By the way, if you are wondering if you should focus on your 403b (or 401K) or a Roth IRA, may I suggest that you read this excellent article over at Consumerism Commentary? Flexo does a great job of addressing the 401K/Roth IRA question!
Side note: I was very happy to learn that the contribution limits are based on how much the employee contributes. If your company ‘matches’ a portion of your contribution, that ‘match’ does not count against your contribution limit! Also, the 403b limit is based on the assumption that the limit will go up by $500, based on cost-of-living increase. The limit for 2007 is $15,500,
and many sources indicate that the limit for 2008 will be $16,000.
(Edit: It looks like the 403b contribution limit will remain unchanged for 2008. It will be $15,500)