Max out Your 401(k) Plan (Year-End Tax Tips)

Maxing out a 401(k) or other employer-sponsored retirement plan has long been a staple of tax planning. Unlike IRAs, contributions to a 401(k) or 403(b) plan must be made by the end of the calendar year. For 2008, the maximum salary reduction contribution for 401(k), 403(b) and 457 plans is $15,500. (Other retirement plan limits can be found in the 2008 quick tax facts.)

Even if you don't max out your retirement plan, you may want to review your retirement plan's asset allocation, investment options, and your contribution levels just to be sure that the plan fits in with your overall savings strategy. You may also want to plan ahead for the increase in 401(k) contributions to $16,500 for 2009. (See can find more figures in 2009 quick tax facts.)

More information:

• What is a 401(k) plan? (About Financial Planning)
• Introduction to Asset Allocation (About Stocks)
• Investment Strategies and Styles (About Investing for Beginners)