Leaving limits at this year’s levels means that 401(k) participants under the age of 50 could contribute a maximum of $16,500, while participants aged 50 and above would be able to contribute up to $22,000.  The announcement made late last week quieted concerns earlier this year that contribution limits to these plans would actually be lowered next year.  The IRS formula used to set contribution levels is based on the cost of living index and the recession could have forced a reduction in contributions by $500.

While the cost-of-living index for the quarter ended September 30th was less than the cost-of-living index for the same quarter in 2008, a decline in the index “cannot result in a reduced limitation” under the Internal Revenue Code, the IRS said in a release.