Your 401K Investment Limits May Drop Next Year

The limits for defined-contribution and defined-benefit plans, which includes your 401K, are adjusted annually based on inflation. Because of the formula, consulting firm Mercer says that, depending on actual inflation levels for August and September, your limits may drop next year.

Current limits are $16,500 for those under 50, and $22,000 for those over 50 in the "catch up" plan. Realistically, however, just how many Americans would be affeted?

After all, few in the U.S. save the maximum allowed to their 401K plans. Various studies show most put away $4,000 to $5,000, and with the recession ongoing, and companies eliminating their 401K matching programs, many are not contributing to their 401Ks at all.

That said, those making enough to put away that much money, the actual limit, are possibly not hurting anyway and may not care so much about their 401Ks. For those who do care, though, the IRS is expected to announce 2010 retirement plan limits on Oct. 15.