401k max becomes $15,500 on Jan 1
 

just a friendly reminder from TM :)

if you are age 50 or older, you may also be eligible to make "catch-up 401k contributions" in addition to your regular 401k limits — IF your employer allows them

What was the previous limit?

$15,000 per year for 2006

15K for 2006.

What about the Roth IRA - has it too been increased in limit? I heard it would be going up to 5K then 6K.

-LAFF

IRA max for 2007 is $4,000, regardless of whether it's Roth or not. Goes up to $5,000 in 2008. Post-2008, the max will raise in increments of $500 adjusted for cost of living.

Thanks...I'll have to check with Vanguard...They are reporting it as $4K for 07, $5k for 08.

-LAFF

I'm talking about under 50...I suspect you have posted the 50 and over #ers.

-LAFF

you're right, LAf. i corrected the numbers, thanks for the catch!

Good post - ALWAYS pay yourself first!

I base Pre-Tax 401K payments on the monthly guarantee and then figure out the percentage required to achieve the 401K limit. Since I always fly more than guarantee, I reach the threshold by the end of November. This leaves a nice little bump in the December paycheck for Christmas or whatever.

By the end of the year - I've maxed the 401K and have a little extra for "the season". Best of all, the 401K contribution comes out of pre-tax dollars so the federal tax liability is reduced and that means paying LESS tax.

Another benefit to look at is Medical and Child care flex-spending, using this you can reduce taxable income by another $5000 per year (depending on your plan).

Here's to prosperity to everyone on the boards in 2007, and paying yourself is a good head start!

I try to hit max as soon as feasible, the sooner your hit the max in the year the more time that money is hopefully compounding.