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Year End Tax Tips for Retirement Accounts

  1. Maximize your 2009 retirement account (401k, SEP, IRA, ROTH) contributions.
    Remember non-working spouses can also contribute to an IRA. The maximum 401K contribution is $16,500; IRA and ROTH - $5,000; SEP IRA limit is 25% of net income. Individuals over 50 years of age, are eligible for special “catch up” provisions which allow for additional contributions of $5,500 to a 401K and $1,000 for IRA’s. The 2010 limits for 401K’s and IRA‘s will remain unchanged.
  2. Consider converting your traditional IRA’s to a Roth IRA after January 1, 2010. There is no income limit to prevent conversion, as in prior years. In addition, the tax due on the conversion will not be payable until the filing of the 2011 and 2012 tax returns. Finally, a nondeductible contribution of $5,000 may be made if your AGI will not exceed $169,000 if filing jointly ($116,000 for other filers).